INCOME TAX ALLOWANCES

2016/2017
£

2017/2018
£

Personal allowance

11,000

11,500

Income limit for personal allowance (1)

100,000

100,000

Income limit for married couples allowance (2)

27,700

28,000

Married couple’s allowance (3):

Maximum amount of married couple’s allowance (people born before 6 April 1935)

8,355

8,445

Minimum amount of married couple’s allowance

3,220

3,260

Marriage allowance (3)

1,100

1,150

Blind person’s allowance

2,290

2,320

Dividend allowance (4)

5,000

5,000

Personal savings allowance (5):

Basic rate taxpayers

1,000

1,000

Higher rate taxpayers

500

500

INCOME TAX RATES AND TAXABLE BANDS

2016/2017
£

2017/2018
£

Starting rate for savings: 0%*

0–5,000

0–5,000

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 2008/09 there is a starting rate for savings income only. If non-savings income is above this limit then the starting rate for savings will not apply.
The dividend rate is the 7.5% ordinary rate (2016–17: 7.5%) and the 32.5% dividend upper rate (2016–17: 32.5%). In addition to these rates, there is a dividend additional rate of 38.1% (2016–17: 38.1%). From 6 April 2016 the dividend tax credit is abolished and replaced with a £5,000 tax-free dividend allowance
(1) From 2016–17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit.
(2) This age-related allowance is reduced by £1 for every £2 of income over this limit.
(3) 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 rate, can transfer this amount of their personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rates.
(4) From 6 April 2016, the Dividend Allowance means that individuals will not have to pay tax on the first £5,000 of dividend income they receive.
(5) From 6 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.