Tax rates and allowances

Corporation Tax

A financial year runs from 01 April to the following 31 March. If the accounting period of a company overlaps the 31st of March, the profits are then apportioned on a time basis to each financial year

The table below shows the Corporation Tax rates by year

Year Rate on profits below £300,000
2019-2020 17%
2018-2019 19%
2017-2018 19%
2016-2017 20%

Income Tax

Rates

The income tax you pay each tax year depends on:

  • How much of your income is above your Personal Allowance
  • How much of your income falls within each tax band
 

UK

 

Rate

Band of taxable income 2018-19 Band of taxable income 2017 – 2018 Band of taxable income 2016 – 2017  

Rate for Dividends

Starting rate for savings 0% Up to £5,000 Up to £5,000 Up to £5,000 N/A
Basic rate 20% Up to £34,500 Up to £33,500 Up to £32,000 7.5%
Higher rate 40% £34,501 to £150,000 £33,501 to £150,000 £32,001 to £150,000 32.5%
Additional rate 45% Over £150,000 Over £150,000 Over £150,000 38.1%

Dividend Allowance

2017 – 2018

Band of Taxpayer Amount Rate (%)
All £5000 0

2018 – 2019

Band of Taxpayer Amount Rate (%)
All £2000 0

Allowance

A personal allowance is the amount of income a personal can get before they pay tax. Income above the personal allowance is subject to income tax.

The personal allowance goes down by £1 for every £2 of income above the £100,000 limit.

Allowance: 2018 – 2019 2017 – 2018
Personal Allowance £11,850 £11,500

Minimum Wage

These are the Rates for the National Living Wage and National Minimum Wage. The rates change every April.

Year 25 and Over 21 – 24 18 – 20 Under 18 Apprentice
Apr 18 – £7.83 £7.38 £5.90 £4.20 £3.40
Apr 17 – Mar 18 £7.50 £7.05 £5.60 £4.05 £3.50
Oct 16 – Mar 17 £7.20 £6.95 £5.55 £4.00 £3.40
Apr 16 – Sept 16 £7.20 £6.70 £5.30 £3.87 £3.30

National Insurance

The rates and thresholds for National Insurance Contributions for 2017 – 2018 are:

Class: Weekly earning Rate
Emp’r Class 1 above Primary Threshold Above £157 13.8%
Employee’s class 1 From £157 to £866 12%
Employee’s additional class 1 Above £866 2%
Self-Employed Class 2 (per week) £2.85

 

Self-Employed Class 4 From £8,164 to £45,000 9%
Self-Employed Class 4 Additional rate Above £45,000 2%

Rates for 2018 – 2019

Class Weekly Earnings Rate
Emp’r Class 1 above Primary Threshold Above £162

 

13.8%
Employee’s class 1 From £162 to £892 12%
Employee’s additional class 1 Above £892 2%
Self-Employed Class 2 (per week) From £162 to £892 £2.95
Self-Employed Class 4 From £8,424 to £46,350 9%
Self-Employed Class 4 Additional rate Above £46,350 2%

<h3>Pensions</h3>

 Automatic Enrolment

Under the Pensions Act 2008, all employers within the UK must enrol all ‘eligible jobholders; into the pension scheme and contribute towards this.

Date Employer minimum contribution Total minimum contribution
Old Rates, up until 5 April 2018 1% 2% (incl. 1% staff contribution)
Currently, from 6 April 2018 to 5 April 2019 2% 5% (incl. 3% staff contribution)
6 April 2019 onwards 3% 8% (incl. 5% staff contribution)

State Pension

You can claim the basic State Pension if you are:

  • A man born before 6 April 1951
  • A woman born before 6 April 1953

To get the basic State Pension you must have paid or been credited with National Insurance contributions. The most you can currently get is £125.95 per week.

If you were born later, you will need to claim the new State Pension.

You can claim the new State Pension if you are:

  • A man born on or after 6 April 1951
  • A woman born on or after 6 April 1953

The earliest you can get the new State Pension is when you reach the State Pension Age. If however you reach the State Pension age before 6th April 2016, you will get the State Pension under the old rules.

You need at least 10 qualifying years on your national insurance record to get any State Pension. The amount an individual may receive can be higher or lower depending on your national insurance records.

 

Value added Tax (VAT)

VAT registered business charge VAT on their Sales (Output). Similarly VAT is charges on most good and also services that are purchased by the business (Input).

There are three rates that are used:

  • Standard – Applies to most goods and services
  • Reduced – Applies to some goods and services (home energy)
  • Zero – Applied to most foods and children’s clothes
  • Exempt – Supplies such as postage stamps, financial and insurance transactions
  • If the taxable supplied excess the annual threshold, the business is required to register for VAT.
  • The thresholds for registering, deregistering or joining a VAT Accounting scheme from 1st April 2017.
Circumstances Thresholds
VAT Registration More than £85,000
Deregistration Less than £83,000

VAT Accounting Scheme Threshold:

VAT accounting Scheme Threshold to join scheme Threshold to leave scheme
Flat Rate Scheme £150,000 or less More than £230,000
Cash Accounting Scheme £1.35 million or less More than £1.6 million
Annual Accounting £1.35 million or less More than £1.6 million
Asmat Accountants

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