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Tax rates, thresholds, and allowances for 2018/19

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.

Tax rates and threshold for the 2017/18 and 2018/19 tax years are shown below. We’ve split them into Personal and Company tax rates – you can use the links to jump to the relevant section.

Personal tax rates

Company tax rates


Personal tax rates

Personal Allowance

2017 / 182018 / 19
Personal Allowance – The amount of salary you can take tax-free every year£11,500£11,850
Income limit for Personal Allowance –The level of earnings at which the Personal Allowance reduces. For each £1 in earnings above £100,000, you lose £0.50p of Personal Allowance.


In 2018/19, you don’t receive any personal allowance when you earn over £123,700 (2017/18 equivalent is £123,000).


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Income Tax

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

2017 / 182018 / 191
Basic rate – The lowest level of income tax20% on earnings up to £33,50020% on earnings up to £34,5001
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 £150,0001
Additional rate – The top rate of income tax for high earners45% on earnings above £150,00045% on earnings above £150,0001

1for 2018/19, there are different income tax rates for Scottish residents

Scottish Income Tax Bands

Scottish BandsBand nameScottish Rate
Over £11,8501 – £13,850Starter19%
Over £13,850 – £24,000Basic20%
Over £24,000 – £44,273Intermediate21%
Over £44,273 – £150,0002Higher41%
Above £150,0002Top46%

1 Assumes individuals are in receipt of the Standard UK Personal Allowance.

2 Those earning more than £100,000 will see their Personal Allowance reduced by £1 for every £2 earned over £100,000.

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Dividend taxes

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

2017 / 182018 / 19
Dividend tax-free allowance£5,000£2000
Dividend ordinary rate – The lowest rate of tax on dividends7.5% on earnings up to £33,5007.5% on earnings up to £34,500
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.38.1% on earnings above £150,00038.1% on earnings above £150,000

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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

2017 / 182018 / 19
Lower earnings limit – Earnings below this limit will incur no NICs£113£5,876£116£6,032
Primary threshold – Earnings below this limit will incur no NICs£157£8,164£162£8,424
Upper earnings limit – Earnings above the Primary threshold and below the Upper earnings limit will be taxed at 12%.£866£45,000£892£46,350
Any earnings above the Upper earnings limit are taxed at 2%

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Employer National Insurance contributions

2017 / 182018 / 19
Secondary threshold – Income above this threshold will incur Employer NICs at 13.8%£157£8,164£162£8,424

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Self-employed National Insurance contributions

2017 / 182018 / 19
Small profits threshold – Earnings below this threshold incur no NICs£6,025 per year£6,205 per year
Lower Profits Limit – Earnings up to this limit incur Class 2 NICs£8,164 per year£8,424 per year


2017 / 182018 / 19
Class 2 NICs£2.85N/A£162£8,424
Upper profits limit – Earnings up to this limit incur further Class 2 NICs and Class 4 NICs of 9%.£866£45,000£892£46,350
Any earnings above this limit incur further Class 2 NICs and Class 4 NICs of 2%

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Capital Gains Tax

Capital Gains Tax is a tax on the profit made when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive. Read our article What is Capital Gains Tax for more information. There are complex rules around capital gain tax so if you need more help please speak with your accountant.


Annual exemption from capital gains£11,300£11,700
As a basic rate taxpayerGains from other residential property 18%18%
Gains from other chargeable assets 20%20%
As a higher rate taxpayerGains from other rresidential property 28%28%
Gains from other chargeable assets20%20%
Entrepreneurs’ Relief10%10%

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Company tax rates

Corporation Tax

2017 / 182018 / 19
Small profits rate – For companies with profits up to £300,00019%19%
Main rate – For companies with profits above £300,00019%19%

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VAT Registration

2017 / 182018 / 19
VAT Registration threshold – The level of revenue at which you must register for VAT£85,000£85,000

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General VAT rates

2017 / 182018 / 19
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


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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.

Remember if you’re a Limited cost trader you must use the rate 16.5% regardless of business sector.

Type of business2018/19 flat rate (%)
Accountancy or bookkeeping14.5
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
Post offices5
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

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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 milesOver 10,000 miles
Car / van£0.45£0.25

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Director Loan Rate

2017/18 and no change in 2018/19
If loaned amount exceeds £10,000 at any point during the year2.5% nominal interest on the whole amount plus

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

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Invoice templates

Invoicing software and templates

Create, send and store sole trader invoices in a snap with our free invoice software. You can also download a selection of invoice templates for all business types.

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Get Ready For End Of Tax Year

We’re fast approaching the end of the tax year on 5th April, and now is usually a good time to get to grips with any tax changes, so you can maximise your tax efficiency for the outgoing tax year and get your business prepared for the new tax year. You’ll also want to stay up-to-date with the rates and thresholds.

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