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Income Tax rates and taxable bands for the 2 tax years from 2016 to 2018

1. Personal tax and benefits

1.1 Income tax bands of taxable income (£ per year)

Tax year 2016-17 Tax year 2017-18
Basic rate £0-32,000 £0-33,500
Higher rate £32,001-150,000 £33,500-150,000
Additional rate Over £150,000 Over £150,000

1.2 Income tax rates – 2016-17

Tax year 2016-17
Main rates 1
Basic rate 20%
Higher rate 40%
Additional rate 45%
Dividend rates 2
Dividend ordinary rate – for dividends otherwise taxable at the basic rate 7.5%
Dividend upper rate – for dividends otherwise taxable at the higher rate 32.5%
Dividend additional rate – for dividends otherwise taxable at the additional rate 38.1%

1.3 Income tax rates – 2017-18

Main rates 3
Basic rate 20%
Higher rate 40%
Additional rate 45%
Savings rates 4
Starting rate for savings 0%
Savings basic rate 20%
Savings higher rate 40%
Savings additional rate 45%
Dividend rates 5
Dividend ordinary rate – for dividends otherwise taxable at the basic rate 7.5%
Dividend upper rate – for dividends otherwise taxable at the higher rate 32.5%
Dividend additional rate – for dividends otherwise taxable at the additional rate 38.1%
Default rates 6
Default basic rate 20%
Default higher rate 40%
Default additional rate 45%

1.4 Starting rates for savings income

Tax year 2016-17 Tax year 2017-18
Starting rate for savings 0% 0%
Starting rate limit for savings £5,000 £5,000

1.5 Special rates for trustees’ income

Tax year 2016-17 Tax year 2017-18
Standard rate on first £1,000 of income which would otherwise be taxable at the special rates for trustees Up to 20%, depends on the type of income Up to 20%, depends on the type of income
Trust rate 45% 45%
Dividend trust rate 38.1% 38.1%

1.6 Income tax allowances

Tax year 2016-17 Tax year 2017-18
Personal allowance
Personal allowance 7 £11,000 £11,500
Income limit for personal allowance £100,000 £100,000
Income limit for Married couple’s allowance 8 £27,700 £28,000
Marriage allowance
Marriage allowance 9 £1,100 £1,150
Married couple’s allowance for those born before 6 April 1935
Maximum amount of married couple’s allowance 10 £8,355 £8,445
Minimum amount of married couple’s allowance 10 £3,220 £3,260
Blind person’s allowance
Blind person’s allowance £2,290 £2,320
Dividend allowance
Dividend allowance 11 £5,000 £5,000
Personal savings allowance
Personal savings allowance for basic rate taxpayers 12 £1,000 £1,000
Personal savings allowance for higher rate taxpayers 12 £500 £500

1. Apply to non-dividend income, including income from savings, employment, property or pensions. From 2017-18, the main rates will be separated into the main rates, the savings rates and the default rates 

2. Apply to dividend income received above the £5,000 tax-free Dividend Allowance, introduced in April 2016 to replace the Dividend Tax Credit 

3. Apply to non-savings, non-dividend income, including income from employment, property or pensions not subject to the Scottish Rate of income tax 

4. Apply to savings income 

5. Apply to dividend income received above the £5,000 tax-free Dividend Allowance, introduced in April 2016 to replace the previous Dividend Tax Credit 

6. Apply to non-savings and non-dividend income of any taxpayer that is not subject to either the Main rates or the Scottish Rates of income tax 

7. The Personal Allowance reduces where the income is above £100,000 – by £1 for every £2 of income above the £100,000 limit. This reduction applies irrespective of date of birth 

8. This age-related allowance is reduced by £1 for every £2 of income over this limit 

9. This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rates, can transfer this amount of their unused personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rates 

10. The relief for this allowance is given at 10%.  2

11. From April 2016, the new Dividend Allowance means that individuals will not have to pay tax on the first £5,000 of dividend income they receive 

12. From April 2016, the Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income. 2