Knowledge

We help make your business a success

Tax rates, thresholds, and allowances for 2017/18

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 / 172017 / 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 / 172017 / 18
Basic rate – The lowest level of income tax20% on earnings up to £32,00020% on earnings up to £33,500
Higher rate – The middle tier of income tax40% on earnings above the basic rate up to £150,00040% on earnings above the basic rate up to £150,000
Additional rate – The top rate of income tax for high earners45% on earnings above £150,00045% 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 / 172017 / 18
Dividend tax-free allowance£5,000£5,000
Dividend ordinary rate – The lowest rate of tax on dividends7.5% on earnings up to £32,0007.5% 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 £150,00032.5% 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 £150,00038.1% 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 / 172017 / 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 / 172017 / 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 / 172017 / 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 / 172017 / 18
Small profits rate – For companies with profits up to £300,00020%19%
Main rate – For companies with profits above £300,00020%19%


 


VAT Registration















2016 / 172017 / 18
VAT Registration threshold – The level of revenue at which you must register for VAT£83,000£85,000


 


General VAT rates

























2016 / 172017 / 18
Standard – The VAT rate applicable to most goods and services20%20%
Reduced rate – A lower rate applicable to certain goods and services5%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 businessCurrent flat rate (%)
Accountancy or bookkeeping14.5
Advertising11
Agricultural services11
Any other activity not listed elsewhere12
Architect, civil and structural engineer or surveyor14.5
Boarding or care of animals12
Business services not listed elsewhere12
Catering services including restaurants and takeaways12.5
Computer and IT consultancy or data processing14.5
Computer repair services10.5
Entertainment or journalism12.5
Estate agency or property management services12
Farming or agriculture not listed elsewhere6.5
Film, radio, television or video production13
Financial services13.5
Forestry or fishing10.5
General building or construction services9.5
Hairdressing or other beauty treatment services13
Hiring or renting goods9.5
Hotel or accommodation10.5
Investigation or security12
Labour-only building or construction services14.5
Laundry or dry-cleaning services12
Lawyer or legal services14.5
Library, archive, museum or other cultural activity9.5
Limited cost trader16.5
Management consultancy14
Manufacturing fabricated metal products10.5
Manufacturing food9
Manufacturing not listed elsewhere9.5
Manufacturing yarn, textiles or clothing9
Membership organisation8
Mining or quarrying10
Packaging9
Photography11
Post offices5
Printing8.5
Publishing11
Pubs6.5
Real estate activity not listed elsewhere14
Repairing personal or household goods10
Repairing vehicles8.5
Retailing food, confectionary, tobacco, newspapers or children’s clothing4
Retailing pharmaceuticals, medical goods, cosmetics or toiletries8
Retailing not listed elsewhere7.5
Retailing vehicles or fuel6.5
Secretarial services13
Social work11
Sport or recreation8.5
Transport or storage, including couriers, freight, removals and taxis10
Travel agency10.5
Veterinary medicine11
Waste or scrap dealing10.5
Wholesaling agricultural products8
Wholesaling food7.5
Wholesaling not listed elsewhere8.5


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 milesOver 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 year3% nominal interest on the whole amount, then


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

Invoice templates

Our invoice templates are professional and sharp. Use them to directly invoice your clients and get paid fast.

Business guides

From understanding expenses to starting a limited company, our downloadable business guides can help you.

Payment reminders

If a client hasn't paid an invoice, download our late payment reminder templates and get that invoice paid fast.

A year end can be a daunting undertaking for first-time limited company directors. However it needn't be the end of the world. Here's what you need to know.

We'll be covering the budget and highlighting the arising issues and announcements that affect freelancers, contractors, and small business owners.

Starting this month, HMRC is introducing a new way of collecting personal tax, called Simple Assessment. Here's what the self-employed need to know.

The best accounting advice

Our accredited team are on hand to help you choose the best package

We understand that it can be difficult deciding whether or not to switch accountants, but at Crunch we’ll offer you fair, unbiased advice on what’s best for you.