Income tax
Personal allowances and reliefs
| 2016/17 | 2015/16 | 2014/15 | 2013/14 | 2012/13 | 2011/12 | 2010/11 | 2009/10 | |
| Personal allowance | £ | £ | £ | £ | £ | £ | ||
| Aged under 65* | 11,000 | 10,600 | 10,000 | 9,440 | 8,105 | 7,475 | 6,475 | 6,475 |
| Born between 6 April 1938 and 5 April 1948 | 11,000 | 10,600 | 10,500 | 10,500 | – | – | – | – |
| Aged 65–74 | – | – | – | 10,500 | 9,940 | 9,490 | 9,490 | |
| Aged 75 & over | – | – | – | 10,660 | 10,090 | 9,640 | 9,640 | |
| Born before 6 April 1938 | 11,000 | 10,660 | 10,660 | 10,660 | ||||
| Blind person’s allowance | 2,290 | 2,230 | 2,160 | 2,100 | 1,980 | 1,890 | 1,890 | |
| Transferable personal allowance (to spouse)** | 1,060 | – | – | – | – | – | – | |
| Married couples allowance (MCA) | ||||||||
| 75 and older
Max Min |
8,355
3,220 |
8,165
3,140 |
7,915
|
7.705
|
7,295
|
6,965
|
6,965
|
|
| Age allowance limit
MCA reduced by £1 for every £2 exceeding limit |
27,700 | 27,000 | 26,100 | 25,400 | 24’000 | 22,900 | 22,900 | |
| Rent a room relief | 7,500 | 4,250 | 4,250 | 4,250 | 4,250 | 4,250 | 4,250 | 4,250 |
*Personal allowance restriction from 2010/11 on
The personal allowance is restricted by £1 for every £2 of an individual’s adjusted net income above £100,000.
** Tranferable allowance: a spouse or civil partner who is not liable to income tax above the basic rate may transfer £1,060 of their unused personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate. Taxpayers have 4 years in which to make the election.
Income tax rates
| Rate | % | 2016/17 | 2015/16 | 2014/15 | 2013/14 | 2012/13 | 2011/12 | 2010/11 | 2009/10 | 2008/09 |
| Basic* | 20% | £0 -£32,000 | £0 – £31,785 | £0 to £31,865 | £0 to £32,010 | £0 to £34,370 | £0 to £35,000 | £0 to £37,400 | £0 to £37,400 | £0 to 34,600 |
| Higher | 40% | £32,000 to £150,000 | £31,786 to £150,000 | £31,866 to £150,000 | £32,011 to £150,000 | £34,370 to £150,000 | £35,001 to £150,000 | £37,401 to £150,000 | 37,401 and above | 34,601 and above |
| Top | 45% | £150,000 + | £150,000 + | £150,000 + | £150,000 + | – | – | – | n/a | n/a |
| Top | 50% | – | – | – | £150,000 + | £150,000 + | £150,000 + | n/a | n/a |
*Starting rate band:
a starting rate applies to savings income up to:
- £5,000 2015/16 – rate 0%
- £2,880 2014/15 – rate 10%
- £2,790 2013/14 ” “
- £2,710 2012/13 ” “
- £2,560 2011/12 ” “
- £2,440 2010/11 ” “
- £2,320 2008/09 to 2009/10 ” “
This band is not available if taxable non-savings income also exceeds this band. See Tax on interest for worked examples.
Note restriction on personal allowances when income is in excess of £100,000 from 2010/11 on.
Child benefit claimants
Commencing on 7 January 2013 the High Income Child Benefit Tax Charge provisions will claw back Child Benefit payments when a claimant or their partner’s income exceeds £50,000.
Tax rate & effective tax rate on dividends
| Rate | 2013/14 to 2015/16 | 2012/13 | 2011/12 | 2010/11 | 2009/10 | 2008/09 |
| Top tax rate | 45% | 50% | 50% | 50% | 40% | 40% |
| Dividend rate | 37.5% | 42.50% | 42.50% | 42.5% | 32.5% | 32.5% |
| Effective rate* | 30.55% | 36.11% | 36.11% | 36.11% | 25% | 25% |
| Higher tax rate | 40% | 40% | 40% | 40% | – | – |
| Dividend rate | 32.5% | 32.5% | 32.5% | 32.5% | ||
| Effective rate* | 25% | 25% | 25% | 25% |
* For example: if an individual who is a top rate tax payer receives a dividend of £20,000 in 2013/14 (dividends are paid net of 10% tax), he will face a tax liability of £6,111 on the net dividend.
Special rates for trustees income
| Rate | 2013/14 to 2015/16 | 2012/13 |
| Standard rate on first £1,000 of income which would otherwise be taxed at the special rate for trustees | Up to 20% depending on type of income | Up to 20% depending on type of income |
| Trust rate | 45% | 50% |
| Dividend trust rate | 37.5% | 42.5% |
Pensions – higher rate restrictions
| Contribution limits | From 2014/15 on | 2011/12 to 2013/14 | To 2010/11 |
| Annual allowance | £40,000 | £50,000 | £215,000 |
| Lifetime allowance | £1.25 million | £1.5 million | £1.8 million |
