With the new tax year starting this past Monday (6 April 2016), new tax allowances and rates have come into effect. This article briefly summarizes these new allowances and rates that are effective for the tax year 6 April 2015 – 5 April 2016.
- Basic rate income tax : 20%. (Paid on earnings between £10,600 and £42,385).
- Higher rate income tax: 40%.
- Additional rate Income tax: 45%.
To read more about income tax, click here.
- Dividend ordinary rate: 10% (Paid by basic rate taxpayers).
- Dividend upper rate: 32.5% (Paid by higher rate taxpayers).
- Dividend additional rate: 37.5% (Paid by additional rate taxpayers).
Read more about dividends here.
- Capital Gains ordinary rate: 18% (Paid by basic rate taxpayers).
- Capital Gains higher rate: 28% (Paid by higher and additional rate taxpayers).
Tax Allowances and Bands
- ISA allowance: £15,240.
- Junior ISA allowance: £4,080.
Read more about ways to invest tax-free outside an Isa here.
- Capital Gains tax allowance: £11,100 (You can earn £11,100 worth of gains before you need to pay tax).
- Inheritance Tax : £325,000 (Click here to see ways to reduce your inheritance tax bills).
- Personal income allowance: £10,600.
- Basic rate band: £0 – £31,785.
- Higher rate Band: £31,786 – £150,000
- .Additional rate band: £150,000+.
Tax relief on pension contributions:
- Non earner (Max £3,600) : 20%.
- Basic rate taxpayer: 20%.
- Higher rate taxpayer: Up to 40% (Higher rate tax relief restricted to the amount of higher rate tax paid).
- Additional rate taxpayer: Up to 45% (Higher rate tax relief restricted to the amount of higher rate tax paid).