Income Tax Rates

If you are looking at Income Tax Rates and reviewing or planning your finances, please feel free to contact us. We can discuss your specific circumstances and tax efficient ways to legally minimise your Income Tax.

Rate 2015-16 2016-17 2017-18 2018-19
Starting rate for savings: 0%* £0 - £5,000 £0 - £5,000 £0 - £5,000 £0 - £5,000
Basic rate: 20% £0 - £31,785 £0 - £32,000 £0 - £33,500** £0 - £34,500**
Higher rate: 40% £31,786 - £150,000 £32,001 - £150,000 £33,501** - £150,000  £34,501*** - £150,000 
Additional rate: 45% Over £150,000  Over £150,000 Over £150,001  Over £150,001 

*Prior to 6th April 2015, this rate was 10% and applied to savings income only.

If, after deducting your Personal Allowance from your total income liable to Income Tax, your non-savings income is above this limit then the starting rate for savings will not apply. Non-savings income includes income from employment, profits from self-employment, pensions, income from property and taxable benefits.

** Scottish Taxpayers only the limit is £31,500 for 2017-18

*** Scottish Taxpayers only, see separate table below for income tax rates on earned income non-savings income. (see note 1)

For Scottish Taxpayers, the following proposed rates and bands will apply if the Scottish Budget for 2018-19 is approved by the Scottish Government.

Name of band Rate Band (of earned income)
Starter rate 19% Over £11,850 up to £13,850
Basic rate 20% Over £13,850 up to £24,000
Intermediate rate 21% Over £24,000 up to £44,273
Higher rate 41% Over £44,273 tup to £150,000
Top rate 46% Above £150,000

Note 1. Scottish rates apply to Scottish taxpayers on all non-savings income which includes earned income from employment, self-employment or partnerships and property income, pension income and any other income that is not classed as savings or dividends.

Taxation of dividends

  16/17 17/18 18/19
Dividend ordinary rate - for dividends otherwise taxable at the basic rate (effective rate with tax credit) 7.5%* 7.5%** 7.5%***
Dividend upper rate - for dividends otherwise taxable at the higher rate (effective rate with tax credit) 32.5%*  32.5%**  32.5%***
Dividend additional rate - for dividends otherwise taxable at the additional rate (effective rate with tax credit) 38.1%* 38.1%** 38.1%***

* With effect from 6th April 2016, the dividend tax credit has been abolished and replaced with a new £5,000 tax-free Dividend Allowance.

** 5,000 tax-free dividend allowance remains in place

*** The tax-free dividend allowance is reduced to £2,000 from 6 April 2018

Please contact us for further information.

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