Income Tax
| Income tax rates | 1 | 2016/17 | 2015/16 |
|---|---|---|---|
| Starting rate limit (savings income) | 2 | *£5,000 | *£5,000 |
| Starting rate | 2 | *0% | *0% |
| Basic rate band - income up to | £32,000 | £31,785 | |
| Basic rate | 20% | 20% | |
| Dividend ordinary rate, otherwise taxable at basic rate | ***7.5% | 10% (0%**) | |
| Higher rate - income over | £32,000 | £31,785 | |
| Higher rate | 40% | 40% | |
| Dividend upper rate, otherwise taxable at higher rate | ***32.5% | 32.5% (25%**) | |
| Additional rate - income over | £150,000 | £150,000 | |
| Additional rate | 45% | 45% | |
| Dividend additional rate, otherwise taxable at additional rate | ***38.1% |
37.5% (30.6%**) |
|
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For 2016/17 Scottish taxpayers are effectively subject to the same income tax rates as the rest of the UK. * If an individual's taxable non-savings income exceeds the starting rate limit, then the starting rate will not be available for savings income For 2016/17, £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free. ** Effective rate with tax credit *** For 2016/17 the first £5,000 of dividends are tax-free |
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| Personal allowance (PA) | |||
| Born after 5 April 1938 | 3 | £11,000 | £10,600 |
| Born before 6 April 1938 | 4 | £11,000 | £10,660 |
| Income limit for PA | 3 | £100,000 | £100,000 |
| Income limit for PA (Born before 6 April 1938) | 4 | £27,700 | £27,700 |
| Blind person's allowance | £2,290 | £2,290 | |
| Married couple's allowance (MCA) | |||
| Either partner born before 6 April 1935 (relief restricted to 10%) | 5 | £8,355 | £8,355 |
| Transferable tax allowance ('Marriage Allowance') | |||
| For certain married couples and civil partners born after 5 April 1935 (relief 20%) | 6 | £1,100 | £1,060 |
| 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 | |
| Golden Handshake max. | £30,000 | £30,000 | |
Notes
- From 2016/17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individual’s date of birth.
- If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income.
- The personal allowance, including the minimum age-related allowance, is reduced by £1 for every £2 that adjusted net income exceeds £100,000, regardless of the individual’s date of birth.
- Personal allowances for those born before 5 April 1938 are reduced by £1 for each £2 of excess income over £27,700 until the basic allowance is reached.
- Similar limits apply to the married couple's allowance. The reduction in allowance is subject to a minimum level of £3,220. (For couples married before 5 December 2005, only the husband's income is taken into account. For those married on or after 5 December 2005 or in a civil partnership, only the higher earner’s income is taken into account).
- Available to spouses/civil partners born after 5 April 1935. The allowance is 10% of the personal allowance for those born after 5 April 1938. 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. The recipient is eligible to a tax reduction at 20% of the transferred amount.