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Rates & Allowances : Accountax Services

Income Tax rates and bands

The table shows the tax rates you pay in each band if you have a standard Personal Allowance of £11,500.

Band Taxable income Tax rate
Personal Allowance Up to £11,500 0%
Basic rate £11,501 to £45,000 20%
Higher rate £45,001 to £150,000 40%
Additional rate over £150,000 45%

Tax rates and bands

Tax is paid on the amount of taxable income remaining after allowance have been deducted.

Band Rate Income after allowances 
2017 to 2018
Income after allowances 
2016 to 2017
Income after allowances 
2015 to 2016
Income after allowances 
2014 to 2015
Starting rate for savings 10% (0% from 2015 to 2016) Up to £5,000 Up to £5,000 Up to £5,000 Up to £2,880
Basic rate in Scotland 20% Up to £31,500 Up to £32,000 Up to £31,785 Up to £31,865
Basic rate in rest of UK 20% Up to £33,500 Up to £32,000 Up to £31,785 Up to £31,865
Higher rate in Scotland 40% £31,501 to £150,000 £32,001 to £150,000 £31,786 to £150,000 £31,866 to £150,000
Higher rate in rest of UK 40% £33,501 to £150,000 £32,001 to £150,000 £31,786 to £150,000 £31,866 to £150,000
Additional rate 45% Over £150,001 Over £150,001 Over £150,001 Over £150,001

Personal Allowances

The Personal Allowance is the amount of income a person can get before they pay tax.

Allowances 2017 to 2018 2016 to 2017 2015 to 2016 2014 to 2015
Personal Allowance £11,500 £11,000 £10,600 £10,000
Income limit for Personal Allowance £100,000 £100,000 £100,000 £100,000

The Personal Allowance goes down by £1 for every £2 of income above the £100,000 limit. It can go down to zero.

 

PAYE tax and Class 1 National Insurance contributions

You normally operate PAYE as part of your payroll so HM Revenue and Customs (HMRC) can collect Income Tax and National Insurance from your employees.

Payroll software will calculate how much tax and National Insurance to deduct from your employees’ pay.

Tax thresholds, rates and codes

The amount of Income Tax you deduct from your employees depends on their tax code and how much of their taxable income is above their Personal Allowance.

PAYE tax rates, thresholds and codes 2017 to 2018
Employee personal allowance £221 per week
£958 per month
£11,500 per year
UK Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £33,500
UK Higher tax rate 40% on annual earnings from £33,501 to £150,000
UK Additional tax rate 45% on annual earnings above £150,000
Scottish Basic tax rate 20% on annual earnings above the PAYE tax threshold and up to £31,500
Scottish Higher tax rate 40% on annual earnings from £31,501 to £150,000
Scottish Additional tax rate 45% on annual earnings above £150,000
Emergency tax codes 1150L W1, 1150L M1 or 1150L X

Class 1 National Insurance thresholds

You can only make National Insurance deductions on earnings above the Lower Earnings Limit (LEL).

Class 1 National Insurance thresholds 2017 to 2018
Lower Earnings Limit (LEL) £113 per week
£490 per month
£5,876 per year
Primary Threshold (PT) £157 per week
£680 per month
£8,164 per year
Secondary Threshold (ST) £157 per week
£680 per month
£8,164 per year
Upper Secondary Threshold (under 21) (UST) £866 per week
£3,750 per month
£45,000 per year
Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) £866 per week
£3,750 per month
£45,000 per year
Upper Earnings Limit (UEL) £866 per week
£3,750 per month
£45,000 per year

Class 1 National Insurance rates

Employee (primary) contribution rates

Deduct primary contributions (employee’s National Insurance) from your employees’ pay through PAYE.

National Insurance category letter Earnings at or above LEL up to and including PT Earnings above the PT up to and including UEL Balance of earnings above UEL
A 0% 12% 2%
B 0% 5.85% 2%
C NIL NIL NIL
H (Apprentice under 25) 0% 12% 2%
J 0% 2% 2%
M (under 21) 0% 12% 2%
Z (under 21 - deferment) 0% 2% 2%


 

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