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Personal Taxation

 2016/172015/16
Personal income tax allowance (PA) £11,000 £10,600
Marriage allowance (transferable) 1,100 1,060
Blind person's allowance 2,290 2,290
Relief at 10% only:
Marriage Couples Allowance (MCA) 8,355 8,355
Minimum MCA 3,220 3,220
Age-related allowance income limit 27,700 27,700
Dividend Tax Allowance (DTA) 5,000 N/A
Personal Savings Allowance (PSA)
– Basic rate Taxpayer 1,000 N/A
– Higher rate Taxpayer 500 N/A
Rent-a-room exemption 7,500 4,250

Notes

  1. PA is reduced by £1 for every £2 by which Adjusted Net Income (ANI) exceeds £100,000, so PA is nil when ANI is £122,000.
  2. ANI is total taxable income less qualifying pension contributions and Gift Aid donations.
  3. Marriage allowance is the transferable part of the PA and is available only to married couples and civil partners born after 5 April 1935. It can be transferred to their spouse or civil partner as long as the recipient is not taxed at more than 20%.
  4. Married Couples Allowance (MCA) depends on age of older spouse and is reduced if marriage or civil partnership took place during the tax year.
  5. MCA is reduced by £1 for every £2 by which ANI exceeds the age-related income limit, down to the minimum MCA of £3,220.
  6. The DTA taxes the first £5,000 of dividend income at nil rather than the rate that would otherwise apply – see rates below.
  7. The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.
  8. The Rent-a-room exemption is available where the taxpayer lets out part of the home they live in as furnished residential accommodation.

Income tax bands

 2016/172015/16
Savings rate band £5,000 £5,000
Basic rate band (BRB) 32,000 31,786
Higher rate band (HRB) 32,001-150,000 31,786-150,000
Additional rate over 150,000 over 150,000

Notes

  1. Savings band only applies to savings income. If taxable general income ('non-savings income') exceeds this band, the savings rate (see below) does not apply.
  2. The BRB and additonal rate threshold are extended by the grossed-up equivalent of personal pension contributions or Gift Aid donations paid by the taxpayer in the tax year, or treated as paid in the tax year.
  3. Taxable income uses up the rate bands in the following order:

Income tax rates

  • G 'general income' (employment, pensions, business profits, rent)
  • S 'savings income' (mainly interest)
  • D 'dividends' (distributions from companies and most unit trusts)
 2016/172015/16
 GSDGSD
Basic rate 20% 20% 7.5% 20% 20% 10%
Higher rate 40% 40% 32.5% 40% 40% 32.5%
Additional rate 45% 45% 38.1% 45% 45% 37.5%

Note

Dividends are taxed as the 'top slice' of income. For 2016/17, the dividend received is taxable. In 2015/16, the dividend received was grossed up by 100/90 to determine the taxable dividend. A non-repayable tax credit equal to 10% of the taxable amount was then deductible against the income tax liability on the taxable dividend.

Remittance basis charge

 2016/172015/16
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years 60,000 60,000
17 of the preceding 20 tax years 90,000 90,000

Note

The remittance basis charge (RBC) is payable by non-UK domiciled individuals who claim the remittance basis and who have been resident in the UK for the periods shown.

High Income Child Benefit charge (HICBC)

 2016/172015/16
Lower threshold £50,000 £50,000
Upper threshold 60,000 60,000

Notes

  1. Only applicable to families who receive child benefit, where adjusted net income of highest earner is above lower threshold.
  2. HICBC is equivalent to 1% of child benefit received by the family, for every £100 of adjusted net income over lower threshold.
  3. Highest earner in family must declare child benefit received by them or their partner on their tax return.
  4. The recipient of child benefit can elect not to receive it in order to avoid the HICBC, without losing their right to accrue certain state benefits. Child benefit payments can subsequently be recommenced if the claimant chooses.
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Directors:  Paul Cutter FCA | Kate Jones FCCA, ACA | Dave Hazlehurst FCCA, CTA

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3 Lyttleton Court | Birmingham Street | Halesowen | West Midlands | B63 3HN

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