The UK has many different tax rates affecting both individuals and businesses – and as a business owner you’ll be affected by all of them.

As well as the actual tax rates, your finances could be affected by the shifting of tax bands and allowances – working out your income can be tricky with a tax system as complex as the UK’s! Check out our take home pay calculator to get a quick answer.

You can find all the current and previous years’ rates on this page, as well as the bands they apply to.

Personal tax rates

Personal Allowance

2016 / 17 2017 / 18
Personal Allowance – The amount of salary you can take tax-free every year £11,000 £11,500
Income limit for Personal Allowance – The level of earnings at which you will cease to receive the full Personal Allowance £100,000 £100,000

 

Income Tax

Note: The rates below do not include the Personal Allowance above.

2016 / 17 2017 / 18
Basic rate – The lowest level of income tax 20% on earnings up to £32,000 20% on earnings up to £33,500*
Higher rate – The middle tier of income tax 40% on earnings above the basic rate up to £150,000 40% on earnings above the basic rate up to £150,000
Additional rate – The top rate of income tax for high earners 45% on earnings above £150,000 45% on earnings above £150,000

*for 2017/18, there are different income tax rates for Scottish residents

 

Dividend taxes

Note: The rates below do not include the Personal Allowance above.

2016 / 17 2017 / 18
Dividend tax-free allowance £5,000 £5,000
Dividend ordinary rate – The lowest rate of tax on dividends 7.5% on earnings up to £32,000 7.5% on earnings up to £33,500
Dividend upper rate – The middle tier of tax on dividends. 32.5% on earnings above the basic rate up to £150,000 32.5% on earnings above the basic rate up to £150,000
Dividend additional rate – The top rate of income tax for high earners. 37.5% (effective 30.6% with tax credit) on earnings above £150,000 38.1% on earnings above £150,000

 

National Insurance

National Insurance bands and rates are some of the most confusing around – not least because everything is different for employees, sole traders and limited company directors. National Insurance contributions are usually calculated weekly, rather than annually. We’ve included both here.

Employee National Insurance contributions

2016 / 17 2017 / 18
Lower earnings limit – Earnings below this limit will incur no NICs £112 per week / £5,824 per year £113 per week / £5,876 per year
Primary threshold – Earnings below this limit will incur no NICs £155 per week / £8,060 per year £157 per week / £8,164 per year
Upper earnings limit – Earnings above the Primary threshold and below the Upper earnings limit will be taxed at 12%.

Any earnings above the Upper earnings limit are taxed at 2%

£827 per week / £43,000 per year £866 per week / £45,000 per year

 

Employer National Insurance contributions

2016 / 17 2017 / 18
Secondary threshold – Income above this threshold will incur Employer NICs at 13.8% £156 per week / £8,112 per year £157 per week / £8,164 per year

 

Self-employed National Insurance contributions

2016 / 17 2017 / 18
Small profits threshold – Earnings below this threshold incur no NICs £5,965 per year £6,025 per year
Lower Profits limit – Earnings up to this limit incur Class 2 NICs £8,060 per year £8,164 per year
Class 2 NICs £2.80 per week £2.85 per week
Upper profits limit – Earnings up to this limit incur further Class 2 NICs and Class 4 NICs of 9%.

Any earnings above this limit incur further Class 2 NICs and Class 4 NICs of 2%.

£43,000 per year £866 per week / £45,000 per year

 

Company tax rates

Corporation Tax

2016 / 17 2017 / 18
Small profits rate – For companies with profits up to £300,000 20% 19%
Main rate – For companies with profits above £300,000 20% 19%

 

VAT Registration

2016 / 17 2017 / 18
VAT Registration threshold – The level of revenue at which you must register for VAT £83,000 £85,000

 

General VAT rates

2016 / 17 2017 / 18
Standard – The VAT rate applicable to most goods and services 20% 20%
Reduced rate – A lower rate applicable to certain goods and services 5% 5%
Zero rate – A rate applied to some goods and services (food, children’s clothes etc.).

Note: this is not the same as items which are exempt from VAT

0% 0%

 

Flat Rate VAT scheme sector rates

If you decide to use the Flat Rate VAT scheme (available to those with revenue of £150,000 or less) you must choose a sector and use the applicable rate for all transactions where VAT applies. If you are unsure which sector you fit into, consult an accountant.

If turnover (inclusive of VAT) exceed £230,000 you can no longer use the the Flat Rate scheme.

Type of business Current flat rate (%)
Accountancy or bookkeeping 14.5
Advertising 11
Agricultural services 11
Any other activity not listed elsewhere 12
Architect, civil and structural engineer or surveyor 14.5
Boarding or care of animals 12
Business services not listed elsewhere 12
Catering services including restaurants and takeaways 12.5
Computer and IT consultancy or data processing 14.5
Computer repair services 10.5
Entertainment or journalism 12.5
Estate agency or property management services 12
Farming or agriculture not listed elsewhere 6.5
Film, radio, television or video production 13
Financial services 13.5
Forestry or fishing 10.5
General building or construction services 9.5
Hairdressing or other beauty treatment services 13
Hiring or renting goods 9.5
Hotel or accommodation 10.5
Investigation or security 12
Labour-only building or construction services 14.5
Laundry or dry-cleaning services 12
Lawyer or legal services 14.5
Library, archive, museum or other cultural activity 9.5
Limited cost trader 16.5
Management consultancy 14
Manufacturing fabricated metal products 10.5
Manufacturing food 9
Manufacturing not listed elsewhere 9.5
Manufacturing yarn, textiles or clothing 9
Membership organisation 8
Mining or quarrying 10
Packaging 9
Photography 11
Post offices 5
Printing 8.5
Publishing 11
Pubs 6.5
Real estate activity not listed elsewhere 14
Repairing personal or household goods 10
Repairing vehicles 8.5
Retailing food, confectionary, tobacco, newspapers or children’s clothing 4
Retailing pharmaceuticals, medical goods, cosmetics or toiletries 8
Retailing not listed elsewhere 7.5
Retailing vehicles or fuel 6.5
Secretarial services 13
Social work 11
Sport or recreation 8.5
Transport or storage, including couriers, freight, removals and taxis 10
Travel agency 10.5
Veterinary medicine 11
Waste or scrap dealing 10.5
Wholesaling agricultural products 8
Wholesaling food 7.5
Wholesaling not listed elsewhere 8.5

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Mileage Allowances

HMRC’s approved mileage allowance payments (sometimes called AMAP) allow business mileage to be claimed as expenses at specific rates. The rates for 2017 / 18 are:

First 10,000 miles Over 10,000 miles
Car / van £0.45 £0.25
Motorcycle £0.24 £0.24
Bicycle £0.20 £0.20

 

Director Loan Rate

If loaned amount exceeds £10,000 at any point during the year 3% nominal interest on the whole amount, then

Class 1A National Insurance contributions (13.8%), and may need to be reported on your P11D

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