Below is a resume of applicable tax rates for individuals in the UK. It is not exhaustive but outlines the main components of tax that will impact on many taxpayers over the years. As we have emphasised in the past it is very important to tax plan and to use all the allowances that are available such as pension contributions, ISAS etc…. Also, Inheritance Tax (IHT) if not planned for can be a significant tax burden for direct dependants particularly with increasing house prices. If in any doubt please consult your Accountant or Financial Advisor.
INCOME TAX RATES UK – Excluding Scotland
|Starter Rate||£1 to £5,000||20%|
|Basic Rate||£5,001 to £37,700||20%|
|Higher Rate||£37,701 to £125,140||40%|
|Additional Rate||over £125,140||45%|
INCOME TAX RATES – Scotland
|Starter Rate||£1 to £2,162||19%|
|Basic Rate||£2,163 to £13,118||20%|
|Intermediate Rate||£13,119 to £31,092||21%|
|Higher Rate||£31,093 to £125,140||42%|
|Additional Rate||Over £125,140||47%|
|TAX ON DIVIDENDS||Tax Rate|
|Dividends||Basic rate Taxpayers||8.75%|
|Dividends||Higher rate Taxpayers||33.75%|
|Dividends||Additional Rate Taxpayers||39.35%|
INCOME TAX ALLOWANCES – INDIVIDUALS
|Blind Person’s Allowance||£2,870|
|Rent a room relief||£7,500|
|Savings||Up to £1,000|
|Dividends||Up to £1,000|
*Personal Allowance reduced by £1 for every £2 of income above £100,000
NATIONAL INSURANCE CONTRIBUTIONS (NICS):
- Class 1 NICs for employees: 12% on weekly earnings between £242.01 and £967.00 and 2% on earnings above £967.00.
- Class 2 NICs for self-employed individuals: a flat rate of £3.45 per week if annual profits are £12,570 or more.
- Class 4 NICs for self-employed individuals: 0% on Profits up to £12,570, 9% on profits between £12,571 and £50,270 and 2% on profits above £50,270.
- Class 3 NICs for voluntary contributions: a flat rate of £17.45 per week.
- Class 1A & 1B Employer: 13.8%
|INHERITANCE TAX||Tax Rate|
|Nil Rate Band (NRB)||up to £325,000||0%|
|Additional Allowance (RNRB)||up to £175,000||0%|
|IHT Payable||Over £325,000||40%|
|Potentially Exempt Gifts (PET)||No Limit||0% – 40%|
INHERITANCE TAX ALLOWANCES
|Annual gift allowance (Max)||£3,000|
|Small gifts allowance (per person)||£250|
|Wedding Gifts||£5,000/children £2500/Grandchildren|
- RNRB only applies if main residence is left to direct descendants.
- Small Gifts – £250/person per year to as many individuals as you like but not to the same person twice or more in one year or if the same individual is in receipt of the annual gift allowance.
- PET – You can gift whatever you want but the beneficiaries are subject to IHT if you pass away within 7 years. The tax due is calculated on a sliding scale based upon the time between the gift and death. It is known as “taper relief”.
CAPITAL GAINS TAX
The following Capital Gains Tax rates apply:
- 10% and 20% tax rates for individuals (not including residential property and carried interest)
- 18% and 28% tax rates for individuals for residential property and carried interest
- 20% for trustees or for personal representatives of someone who has died (not including residential property)
- 28% for trustees or for personal representatives of someone who has died for disposals of residential property
- 10% for gains qualifying for Business Asset Disposal Relief — previously known as Entrepreneurs Relief
- 28% for Capital Gains Tax on property where the Annual Tax on Enveloped Dwellings is paid, annual exempt amount is not applicable
- 20% for companies (non-resident Capital Gains Tax on the disposal of a UK residential property)
As Accountants & Business Advisors, we are experts in advising on individual and business taxation. If you are concerned about IHT or your tax affairs please contact us for a no obligation consultation.
020 7118 4422