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Income Tax

Income Tax
2017/18
2016/17
Starting rate limit (savings income)
*£5,000
*£5,000
  Starting rate
*0%
*0%
Basic rate band - income up to
**£33,500
£32,000
  Basic rate
20%
20%
  Dividend ordinary rate
***7.5%
***7.5%
Higher rate - income over
**£33,500
£32,000
  Higher rate
40%
40%
  Dividend upper rate
***32.5%
***32.5%
Additional rate - income over
£150,000
£150,000
  Additional rate
45%
45%
  Dividend additional rate
***38.1%
***38.1%


* If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.

** Scottish taxpayers are liable on non-savings income and non-dividend income at 20% income tax up to £31,500, 40% between £31,501 to £150,000 and then 45%.

*** The first £5,000 of dividends are tax-free.

 
2017/18
2016/17
Personal allowance 1
£11,500
£11,000
Blind person's allowance
£2,320
£2,290
Married couple's allowance (MCA)
Either partner born before 6 April 1935 (relief restricted to 10%) 2
£8,445
£8,355
Transferable tax allowance ('Marriage Allowance')
For certain married couples and civil partners born after 5 April 1935 (relief 20%) 3
£1,150
£1,100
Tax Shelters
Venture Capital Trust (VCT) up to
£200,000
£200,000
Enterprise Investment Scheme (EIS) up to
£1,000,000
£1,000,000
Seed Enterprise Investment Scheme up to
£100,000
£100,000
Social Investment Tax Relief
£1,000,000
£1,000,000

Notes

  1. Where adjusted net income exceeds £100,000, PA is reduced in the same way until it is nil regardless of the individual’s date of birth.
  2. Allowances are reduced by £1 for every £2 that adjusted net income exceeds £28,000 (£27,700 2016/17) to a minimum MCA of £3,260 (£3,220 2016/17).
  3. Available to spouses/civil partners born after 5 April 1935, the allowance is 10% of the standard personal allowance. It allows a spouse or civil partner who is not liable to income tax above the basic rate to transfer this amount of their personal allowance to their spouse/civil partner. The recipient must not be liable to tax above the basic rate. Relief is given as a tax reduction at 20% of the transferred amount.