Tax Rates for 2017 – Personal & Corporate

The start of a new tax year on 6 April 2017 brought a wave of changes to the amount of personal and corporate tax rates you could pay as an individual or business this year.

Below, we’ve summarised the changes brought about by Philip Hammond’s first budget.

 

Tax Rates and Allowances in 2017 – Personal Allowance

  • Personal allowance has increased to £11,500

The amount of income you can receive before paying Income Tax has risen by £500 (from £11,000 in 2016/17). Your £11,500 allowance is reduced by £1 for every £2 of income you receive above £100,000 – so if your income is £123,000 or above, your allowance will be zero.

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Tax Rates and Tax Band Limits – Income Tax

  • The basic rate tax band limit has increased to £33,500.
  • The basic rate tax band limit for Scotland has been set at £31,500.

The basic rate limit for England, Wales and Northern Ireland has increased by £1,500 (from £32,000 in 2016/17) and, for the first time ever, Scotland has set its own rates.
You pay the basic rate on taxable income over your Personal Allowance of £11,500. Other income (wages, income from property etc) is taxed first, followed by savings income and then dividends. The first £5,000 of dividends are tax free and £1,000 of savings income for basic rate tax payers (£500 for higher rate) may be tax free.

2017/18 Income Tax rates for England, Wales and NI:

  • Basic rate – 20% for income between £0 and £33,500
  • Higher rate – 40% for income between £33,501 and £150,000
  • Additional rate – 45% for income over £150,000

2017/18 Income Tax rates for Scotland:

  • Basic rate – 20% for income between £0 and £31,500
  • Higher rate – 40% for income between £31,501 and £150,000
  • Additional rate – 45% for income over £150,000

Basic Rate Tax Limits and Dividend Tax

  • Ordinary rate limit has increased to £33,500 (England, Wales and NI).
  • Ordinary rate for Scotland is set at £31,500.

Inline with the 2017/18 basic rate tax limit, the dividend ordinary rate limit has increased by £1,500 (from £32,000 in 2016/17) for England, Wales and Northern Ireland. With Scotland now setting its own basic rate tax limit, the dividend ordinary rate has decreased by £500.

2017/18 rates:

  • Dividend tax-free allowance – £5,000
  • Dividend ordinary rate – 7.5% on earnings up to £33,500 (£31,500 for Scotland)
  • Dividend upper rate – 32.5% on earnings above the basic rate up to £150,000
  • Dividend additional rate – 38.1% on earnings above £150,000

Tax Rates in 2017 | National Insurance

  • Payment thresholds and limits have increased

All National Insurance Contributions, Corporation Tax and VAT payment thresholds and limits for employers, employees, self-employed and limited companies have increased for 2017/18.

Next steps

As always, we recommend seeking professional advice before making any changes to the way you operate your business and manage your accounts. Every business is different, and tax rates and allowances are subject to exemptions and rules. With this in mind, please use the above as a guide only.

For personal guidance that reflects your particular circumstances, please contact us at Maitland Limited. We offer impartial advice and can recommend the best online Cloud Accounting to help you keep track of your tax liabilities.

Speak to a member of our team on 01825 748308.

The following are all Tax Rates & Allowances and can be found on our website just here.