Tax information sheet 2017/18

 April 2017

Fact sheet no. BDL19 EW Tax information sheet

This fact sheet tells you about the current tax rates and allowances. Use this fact sheet to find out about:

  • personal allowances for income tax;
  • income tax rates and bands;
  • National Insurance contributions for sole traders;
  • National Insurance contributions for directors of limited companies and employees;
  • corporation tax;
  • value added tax (VAT); and
  • Working Tax Credit and Child Tax Credit rates.

Income tax allowances

​Personal allowances

​2016/17

2017/18
​Personal allowance (1) ​£11,000 £11,500
​Income limit for personal allowance (2) £​100,000 ​£100,000
​Income limit for married couple's allowance (3) £27,700 ​£28,000
​Married couple's allowance (maximum amount) (4) £​8,355 ​£8,445
​Married couple's allowance (minimum amount) (5) £​3,220 ​£3,260
​Blind person's allowance £​2,290 £2,320​

Notes

(1) and (2) Since 2016/17 everyone is entitled to the same personal allowance and income limit, no matter when they were born.

(3) Where income is above £28,000, the allowance is reduced by £1 for every £2 above the limit.

(4) and (5) The relief for married couple's allowance is given at 10%.

Information:

Scottish income tax

From 6 April 2017 Scottish income tax bands differ from those set in England and Wales. This fact sheet is for taxpayers in England and Wales only.

Do not use this fact sheet if you are a Scottish tax payer. See the Scottish version of the Tax information sheet.

Income tax rates and bands

2016/17​ 2017/18​
​Basic rate 20% £0 - £32,000​ ​£0 - £33,500
​Higher rate 40% £32,001 - £150,000​ £33,501 - £150,000​
​Additional rate 45% Over £150,000​ Over £150,000​

From 2017/18 tax relief for finance costs for landlords of residential properties will be restricted to the basic rate only. See HM Revenue and Customs guidance on Changes to tax relief for residential landlords for more information.

National Insurance contributions

2016/17​ 2017/18​
​Class 2 £2.80pw​ £2.85pw​
​Class 2 - Small earnings exemption £5,965pa​ £6,025pa​
Class 4 - Lower profits limit​ £8,060pa​ £8,164pa​
​           - Upper profits limit £43,000pa​ £45,000pa​
​           - Rate between upper and lower profits limit 9%​ ​9%
​           - Rate above upper profits limit 2%​ 2%​

Example calculation of estimated monthly income tax and National Insurance contributions 2017/18

  • If you are under 65 and either a sole trader or a partner in a partnership, this example will help you work out the monthly income tax and National Insurance you should pay on your profit from your business.
  • You will then be able to work out your Drawings from business. This will help you work out your household budget sheet to show you what you have available to pay your creditors.

  • In this example, the figure worked out on the business budget sheet for Drawings (what your profit is before tax and National Insurance) is £3,800.

  • Estimated monthly income tax

    ​1. ​Figure from Drawings box (top box on page 4 of Your business and household budget sheet) £3,800​ A​
    ​2. ​Multiply by 12 to get the annual figure ​£45,600 B​
    ​3. Tax allowance (refer to personal allowances​) ​£11,500 C​
    ​4. ​Taxable amount = B - C ​£34,100 D​
    ​5. ​First £33,500 of D multiplied by 20% ​£6,700 E​
    6.​ D - ​£33,500 (if answer is greater than 0) multiplied by 40% ​£240 F​
    ​7. ​Estimated yearly tax liability = E + F ​£6,940 G​
    8.​ Estimated monthly tax liability = G divided by 12​ £578.33​ H​

    Use H £578.33 as the Estimated tax figure on Your business and household budget sheet.

    Estimated National Insurance contributions

    Class 2 National Insurance contributions

    Use a flat-rate of £12.35 per month (£2.85 per week) as the National Insurance class 2 figure on Your business and household budget sheet.

    Class 4 National Insurance contributions

    ​1. ​Use Figure B from above (if figure is more than the maximum of £45,000 insert £45,000)  ​£45,000 I​
    ​2. I - £8,164​ £36,836 J​
    ​3. Rate payable between upper and lower limits = J multiplied by 9% £3,315.24​ K​
    ​4. Figure B from above minus £45,000 (if answer is less than 0 insert 0)​ £​600 L​
    ​5. Rate payable above upper limit = L multiplied by 2%​ ​£12.00 M​
    ​6. Yearly class 4 contributions = K + M​ £3,327.24​ N​
    ​7. Monthly class 4 contributions = N ​divided by 12 ​£277.27

    O

    Use O £277.27 as the National Insurance class 4 figure on Your business and household budget sheet.

Corporation tax

2016/17​ 2017/18​
​Small profits rate £0 - £300,000 20%​ ​19%
​Main rate £1,500,000 or more 20%​ 19%​

Value added tax (VAT)

2016/17​ 2017/18​
​Standard rate 20%​ 20%​
Reduced rate​ 5%​ ​5%
Zero rate​ 0%​ 0%​
Registration level​ £83,​000 £85,000
​De-registration level £81,000​ £83,000

National Insurance contributions class 1

​Directors and employees 2016/17​ 2017/18​
​Lower earnings limit primary class 1 £112pw​ ​£113pw
Upper earnings limit primary class 1​ £827pw​ £866pw​
Primary threshold​ £155pw​ £157pw​
Secondary threshold​ £156pw​ £157pw​

 

​Rates 2016/17​ ​2017/18
​Class 1 rate between primary threshold and upper earnings limit 12%​ 12%​
Class 1 rate above upper earnings limit​ 2%​ ​2%
Class 1A rate on employer provided benefits​ 13.8%​ 13.8%
​Employers' rates 2016/17​ 2017/18​
Secondary class 1 rate above second threshold​ 13.8%​ 13.8%​