If you are looking at Income Tax Rates and reviewing or planning your finances, please feel free to contact us. We can discuss your specific circumstances and tax efficient ways to legally minimise your Income Tax.
Income Tax rates and taxable bands
|Starting rate for savings: 0%*||£0 – £5,000||£0 – £5,000||£0 – £5,000|
|Basic rate: 20%||£0 – £32,000||£0 – £33,500**||£0 – £34,500**|
|Higher rate: 40%||£32,001 – £150,000||£33,501** – £150,000||£34,501*** – £150,000|
|Additional rate: 45%||Over £150,000||Over £150,001||Over £150,001|
*Prior to 6th April 2015, this rate was 10% and applied to savings income only.
If, after deducting your Personal Allowance from your total income liable to Income Tax, your non-savings income is above this limit then the starting rate for savings will not apply. Non-savings income includes income from employment, profits from self-employment, pensions, income from property and taxable benefits.
** Scottish Taxpayers only the limit is £31,500 for 2017-18
*** Scottish Taxpayers only, see separate table below for income tax rates on earned income non-savings income. (see note 1)
For Scottish Taxpayers, the following proposed rates and bands will apply if the Scottish Budget for 2018-19 is approved by the Scottish Government.
|Name of band||Rate||Band (of earned income)|
|Starter rate||19%||Over £11,850 up to £13,850|
|Basic rate||20%||Over £13,850 up to £24,000|
|Intermediate rate||21%||Over £24,000 up to £43,430|
|Higher rate||41%||Over £43,430 up to £150,000|
|Top rate||46%||Above £150,000|
Note 1. Scottish rates apply to Scottish taxpayers on all non-savings income which includes earned income from employment, self-employment or partnerships and property income, pension income and any other income that is not classed as savings or dividends.
Taxation of dividends
|Dividend ordinary rate – for dividends otherwise taxable at the basic rate (effective rate with tax credit)||7.5%*||7.5%**||7.5%***|
|Dividend upper rate – for dividends otherwise taxable at the higher rate (effective rate with tax credit)||32.5%*||32.5%**||32.5%***|
|Dividend additional rate – for dividends otherwise taxable at the additional rate (effective rate with tax credit)x||38.1%*||38.1%**||38.1%***|
* With effect from 6th April 2016, the dividend tax credit has been abolished and replaced with a new £5,000 tax-free Dividend Allowance.
** 5,000 tax-free dividend allowance remains in place
*** The tax-free dividend allowance is reduced to £2,000 from 6 April 2018
Please contact us for further information.
The information should be used as a guide only and your specific circumstances are best discussed directly with us.
No reliance should be placed on this material and no action should be taken without seeking the appropriate professional or legal advice. Although the authors make reasonable efforts to ensure the content is accurate and up-to-date, the authors make no representations, warranties or guarantees that the content is accurate, complete or up-to-date and accept no responsibility whatsoever for any loss occasioned by anyone acting on this information.