Tax rates, limits and allowances for 2015/16
The Personal Allowance - the amount of money you can earn each year without having to pay income tax: £10,600.
[Note: Those born before 6 April 1938 who receive annual income of up to £27,700 are entitled to a higher amount of up to £10,660. This higher personal allowance reduces by £1 for every £2 of net adjusted income above £27,700 and means those with income of £27,820 or more receive the standard personal allowance of £10,600. And if you earn above £100,000 a year, your Personal Allowance falls by £1 for every £2 that your adjusted net income is above £100,000. As Gov.uk points out, this means your allowance is reduced to zero if your income is £121,200 or above.]
Married couple's allowance (where at least one of the partners was born before 6 April 1935): Between £3,220 and £8,355. Tax relief restricted to 10%.
Income tax rate bands by annual gross salary (not including £10,600 Personal Allowance)
Basic rate of 20%: £0 - £31,785
Higher rate of 40%: More than £31,785 - £150,000
Additional rate of 45%: More than £150,000
Annual Allowance: £40,000 (you can carry forward unused allowances for the previous three tax years)
Lifetime Allowance: £1.25 million
State Pension: £115.95 (for those reaching state retirement age before April 2016)
Pension Guarantee Credit weekly income threshold: £151.20 (single people), £230.85 (couples)
Isa Allowance: £15,240. Can be held in cash or invested in stocks and shares in any combination.
Junior Nisa Allowance: £4,080
Starting rate for savings income: 0% up to £5,000 for those with annual income of less than £15,600.
Capital Gains Tax
Annual Exempt Amount: £11,100
Standard rate of CGT: 18%
Higher rate (for higher rate income tax payers): 28%
Rate for Entrepreneurs: 10%
Inheritance Tax threshold: £325,000
UK excluding Scotland
For residential property/land:
Nothing on the first £125,000 of the property price, followed by:
• 2% between £125,001 and £250,000
• 5% between £250,001 and £925,000
• 10% between £925,001 and £1.5million
• 12% on anything above £1.5 million.
Scottish Land and Buildings Transaction Tax (LBTT)
Nothing on the first £145,000 of the property price, followed by:
• 2% between £145,001 and £250,000
• 5% between £250,001 and £325,000
• 10% on the next £325,001 and £750,000
• 12% on anything above £750,000.
National Minimum Wage (by age)
21+: £6.50 (rising to £6.70 from 1 October 2015)
18-20: £5.13 (£5.30)
16-17: £3.79 (£3.87)
Apprentice: £2.73 (£3.30)
National Insurance (Per week, unless stated)
Class 1 rate: 12% on weekly earnings between £155 and £815. 2% on weekly earnings over £815.
Married women's reduced rate between primary threshold and upper earnings limit: 5.85%
Class 2 small earnings exception (per year): £5,965
Class 2 rate: £2.80
Class 4 small earnings exception (per year): £8,060
Class 4 rate: 9% on profits between £8,060 and £42,385
2% on profits over £42,385.
Statutory Sick Pay
For employees earning at least £109 a week too unwell to go to work for four or more days in a row: £88.45
Statutory Maternity Pay
This is paid for up to 39 weeks. You get:
• 90% of your average weekly earnings (before tax) for the first six weeks
• £139.58 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks.
Working and child tax credits (£ per year unless stated)
Working Tax Credit
Basic element: £1,960
Couple and lone parent element: £2,010
30-hour element: £810
Disabled worker element: £2,970
Severe disability element: £1,275
Childcare element – maximum eligible cost for one child: £122.50 per week
Childcare element – maximum eligible cost for two or more children: £210 per week
Child Tax Credit
Family element: £545
Child element: £2,780
Disabled child element: £3,140
Severely disabled child element: £1,275
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
Child tax credit
A scheme started in 2003 that sought to replace a raft of other tax credits and benefits, the payout depends on the number of dependant children in a family, and its level of income. The amount of credit is reduced as income increases. It is payable to the main carer of a child, usually the mother, and is available whether or not the recipient is working.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
Capital gains tax
If you buy an asset – shares, a second home, arts and antiques – and then sell it at a later date and make a profit, that profit could be subject to CGT. You don’t pay CGT on selling your main home (which is why MPs “flipped” theirs so regularly) or any securities sheltered in an ISA. Individuals get an annual CGT allowance (£10,600 in 2010/2011) but if you have substantial assets it’s worth paying an accountant to sort it for you.