Useful Tax Data

Below are the tax tables for 2012/2013 together with historical data for the year previous. For quick access to any specific section, please click on the following links.

For employees' NIC, see Employee Tax.

Self-employed people pay:

• weekly Class 2 contribution of £2.65, unless they claim exception for small earnings (below £5,595).
• Class 4 NIC at 9% of taxable profits between £7,605 and £42,475. Profits over £42,475 will be charged at 2%. This is assessed and paid with the self-assessment income tax on profits.
• Class 3 voluntary NIC may be paid at £13.25 per week by someone who is not in work but who wishes to maintain state pension rights.

Annual limits

Someone who is both employed and self-employed will pay Class 1, Class 2 and Class 4 NIC. It is possible to apply for deferment of Class 4, and sometimes Class 2 as well, so that the Class 1 paid on earnings can be taken into account. Class 4 will then be charged at only 2%, and the overall liability will be settled at a later date.

Tax rates and payment

Employment income is charged to both income tax (as 'general' income) and to Class 1 National Insurance Contributions. Tax and NIC are normally paid by the employer through the PAYE system, but an employee whose tax is not fully paid should complete a tax return and settle the liability as described on Personal Tax.

If the tax underpaid is up to £3,000 and the 2011/12 tax return is submitted by 30 September 2012, the underpayment can be settled through PAYE for 2012/13 rather than being collected on 31 January 2013.

Class 1 NIC rates 2012/13

Employers and employees both contribute. Employee contributions used to be capped at the upper earnings limit, but a charge of 2% will now apply to all pay above the primary threshold.

A person with more than one employment can defer the payment of some employee NIC until after the end of the tax year, when the total amount payable can be checked and limited so the full 12% rate is only applied to income between the Primary Threshold and Upper Earnings Limit.

Benefits in kind

Benefits in kind are usually valued at a 'cash equivalent' and are then charged to income tax on the employee and Class 1A NIC (at 13.8%) on the employer. The cash equivalent is generally based on the cost to the employer of providing the benefit, but the following are charged according to a statutory formula.

Cars

Cars provided by the employer: a percentage of the original list price of the car, depending on the CO2 emissions rating of the car between 5% and 35%.

Fuel

Fuel provided by the employer for private use in a company car is charged without reduction for contributions unless all private fuel is paid for by the employee.

To calculate the taxable amount the percentage used to calculate car benefit is applied to a standard figure of £20,200.

Vans

The scale charge and fuel charge is £3,000 and £550 respectively.

Loans of money

Loans of over £5,000 are charged on the excess of the official rate (currently 4%) over any interest actually paid by the employee to the employer.

Use of assets

This is charged at 20% of the original cost of the assets to the employer, or the value when first made available to the employee, less any amount paid by the employee for private use.

Main exempt benefits in kind

Many benefits in kind are not charged to tax. A full list cannot be given here, but some of the principal ones are:

• providing a mobile phone, even with private use (but paying the bills on the employee's own phone remains chargeable)
• the provision of 'green transport' such as works buses or the use of a bicycle for commuting.

Exempt mileage allowances: employee's own car

Other exempt payments to or for employees

• mileage allowances of up to 24p per mile for business use of the employee's motorcycle or 20p per mile for a pedal cycle.
• contributions to approved pension schemes
• payments of up to £5 a night when staying away for 'personal incidental expenses' (£10 if abroad).

Employee share schemes

Generally, employees are charged to income tax on the value of shares that they are given or issued by their employer, less any amount paid for the shares. This applies to 'free shares' and to shares acquired under option schemes. NIC is also charged if the company is quoted, as the shares can be easily sold.

If the employer operates one of these 'Revenue-approved' share schemes, the tax charge may be eliminated, reduced or deferred.

Trusts are liable to income tax on income and CGT on gains for each tax year. The trustees are responsible for filing self assessment tax returns by the normal date (31 January 2013 for 2011/12), paying the tax on the normal dates (payments on account of income tax on 31 January 2012 and 31 July 2012 and the balance of income tax and the whole of the CGT on 31 January 2013).

The tax rates applicable to trusts are:

The CGT annual exemption is divided between trusts established by the same settlor since 1978, to a minimum of £1,010.

Trusts are also liable to pay inheritance tax in a variety of circumstances, and trustees should make sure that they have appropriate professional advice to enable them to fulfil all their legal and fiscal responsibilities.

Rates

The nil rate band for cumulative chargeable transfers in the last seven years is £325,000 for gifts from 6 April 2009 onwards*. This remains unchanged in 2010/2011 and it was announced in the April 2010 Budget that this shall be frozen at this level for 4 years. Gifts above that are charged at the following rates:

*Any unused proportion of the nil rate band, expressed as a percentage, may be used when the second spouse or civil partner dies.

Payment

IHT on a deceased's estate and on gifts within 7 years of death is generally payable at the end of six months after the month of death, but it must be paid before probate is granted, and this may necessitate earlier settlement.

IHT on lifetime gifts is generally payable on the later of six months after the month of transfer or 30 April in the next tax year.

Major reliefs

The following transfers are exempt from IHT:

• the first £3,000 gifted in a tax year (unused limit may be carried forward for one year)
• small gifts of up to £250 to one person in a year
• normal expenditure out of income
• gifts between husband and wife, unless the donor is domiciled in the UK and the recipient is not in which case transfers are only exempt up to £55,000.
• gifts between individuals more than 7 years before the donor's death (until the donor dies such gifts are left out of account as 'potentially exempt').
• gifts in consideration of marriage - £5,000 from a parent, £2,500 from a grandparent or a party to the marriage, £1,000 from others.

Most business and agricultural property enjoys a 100% relief once it has been owned for two years, although some types of property are relieved only at 50%, and it is important to meet all the conditions.

Rates of tax

The standard rate of VAT is 20%, or 1/6th of the consideration received for making a supply.

A lower rate of 5% (or 1/21 of the gross receipt) applies to supplies including domestic fuel and power, installation of energy saving materials in houses, and some conversions of residential property.

A zero rate applies to a range of supplies including most food, books, new houses, and children's clothes.

Certain other supplies are exempt, which means no tax is charged to the customer, but the supplier cannot recover VAT on costs. These include many land-related supplies, insurance, finance, education, health and welfare, and non-profit sports clubs.

Thresholds

An unregistered business must register if it has made £77,000 of taxable supplies in the last 12 months, up to any month end, or if it expects to make £73,000 of taxable supplies in the next 30 days.

A registered business can deregister if it can satisfy HMRC that taxable supplies in the next year will not exceed £75,000.

Small businesses with taxable turnover of up to £150,000 can opt to use the 'flat-rate scheme'. A single rate, which varies with the type of business, is applied to all receipts, and no VAT is claimed on costs. The single rate is lower than 1/6th to compensate for lost input tax.

Small businesses with taxable turnover of up to £1,350,000 can use the cash accounting scheme (only paying VAT to Customs when customers have paid).

Scale charge for private use of fuel paid for by business

Returns and payments

Most VAT returns are prepared for three-month periods, and they are due (with any payment) by the end of the next month.

Gains in excess of the annual exemption are charged at 18% for basic rate taxpayer and 28% for higher rate taxpayer. A limited form of relief known as Entrepreneurs Relief is available for the disposal of certain business assets, up to the value of £10 million. Where this relief is available, the tax rate reduces to 10%.

Major CGT reliefs

A number of types of asset are exempt from CGT, including chattels (tangible movable property) which are bought and sold for less than £6,000; cars; and the taxpayer's only or main residence. A taxpayer with more than one residence can choose which is to be exempt, but it is not possible to apply the exemption to an investment property which is rented out.

Gifts to charity are not charged to CGT, and gifts of quoted shares and land also enjoy an income tax relief (see Personal Tax).

Deferral of gains

Deferral is allowed on some types of reinvestment, such as subscription for new Enterprise Investment Scheme (EIS) shares.

The rate of tax depends on the total profits of the company, but marginal relief is available where the profits fall within particular bands. The effective rate of tax within the band is shown in the table.

The bands are adjusted for associated companies and for accounting periods of less than 12 months.

Payment and filing

Companies which do not pay at the full rate (i.e. profits below £1.5m) settle their CT liability 9 months and a day after the end of the accounting period.

Large companies generally make payments on account of CT 6.5 months, 9.5 months, 12.5 months and 15.5 months after the start of a 12 month accounting period, with interest running until final settlement of the period's liability.

All companies file returns 12 months after the end of the period.

Taxation of dividends

Companies are not charged to CT on dividends received from other companies. Individuals and trusts receive dividends with a 10% 'tax credit'. The dividend plus the tax credit (100/90 of the amount received) is treated as taxable income, and the 10% tax credit settles some or all of the tax liability. But a taxpayer with no liability cannot obtain a repayment of the tax credit from the Revenue - it can only be used to settle liabilities.

Businesses in general pay PAYE in respect of their employees and Value Added Tax (VAT) on turnover if they are required to be registered for that tax. Unincorporated businesses (sole traders and partnerships) pay Income Tax and National Insurance (NIC) on their profits. Companies pay Corporation Tax on all their profits including capital gains, against which, unlike individuals, they have no annual exemption.

Capital allowances

Major changes were made to the capital allowances system which took effect on 1st April 2008 for companies and 6th April 2008 for sole traders and partnerships. The major changes are listed below: -

Special Pool

A special pool has been introduced for building integral features such as electrical and water systems, lifts, escalators and walkways. The special pool will also be used for long life plant. A writing down allowance of 10% will be available.

Writing Down Allowance

The writing down allowance on plant & machinery is 20%. High emission cars attract a 10% writing down allowance.

Low Emission Cars

These will continue to attract a 100% first year allowance until 2013.

Annual Investment Allowance

With effect from 1st April 2010, an annual investment allowance of £100,000 is available to all businesses. In effect a 100% allowance will be available on additions to the general and special pools (but not on cars) of up to that level. From 1st April 2012 for companies and 6th April 2012 for individuals, this limit reduces to £25,000.

Small Pool Balances

As soon as a general or special pool reduces to a level of £1,000 or below it will be possible to write it off completely.

The main rates of capital allowances are set out below: -

Income Tax

The Chancellor confirmed his announcement made in the Autumn Statement that there would be no increases in personal allowances or the level at which 40% tax is payable. The new 50% rate on incomes above £150,000 has been confirmed and personal allowances will be tapered at a rate of £1 for each £2 of income above £100,000. This equates to a 60% rate on those with incomes between £100,000 and £116,210. So effective rates are as follows:-

The small 10% band is retained for savings income. This rate is available for up to £2,710 of savings income in 2012/13. Because the rate of Income Tax you pay on savings is worked out after any non-savings income has been taken into account, if your non-savings income is less than £2,710, or if savings and investments are your only source of income, your savings income will be taxed at the 10 per cent starting rate up to the limit. If, however, you already have non-savings income which takes you above the starting rate, all of your savings will be taxed at the 20 per cent basic rate.

In 2012/13 an individual can receive total gross income of £42,475 before paying higher rate tax.

Allocation of rate bands

Taxable income uses up the rate bands in the following order:

Extension of basic rate band

A taxpayer who pays personal (including stakeholder) pension policy premiums, or cash gifts to charity, increases the basic rate band by the grossed up equivalent of the payment. This means that more tax is paid at the basic rate and less is paid at the top rate.

Filing of return and payment

2011/12 personal tax return is due to be filed by 30th September 2012 if filed via a paper return or 31st January 2012 if filed electronically. The penalty for late return is £100.

2012/13 tax payable:

• tax on employment income paid under PAYE each month
• basic rate liability on savings and dividends usually settled by receiving the income net of tax paid or credited
• balance of tax due under self assessment (SA):

Missing any payment dates leads to interest; missing the balancing payment date by 28 days will lead to a 5% surcharge and a further 5% surcharge if not paid by 28th August.

Main Personal Allowances 

Age Allowances

* Born before 6th April 1935

If the taxpayer's total income exceeds the income limit (extended for gift aid and pension contributions), the age related allowances are reduced by £1 for every £2 of excess income. This is applied first from the Personal Allowance until the minimum is reached, then from the Married Couples Allowance until the minimum is reached.

Please note that the Married Couple Allowance is applied by way of a tax reduction and relief is granted at 10%.

Main Personal Reliefs

Rent-a-room exemption

For letting out part of the taxpayer's only or main residence, you may receive gross income of £4,250 per annum.

Gift aid

On a cash gift to charity, the charity can reclaim 20/80 (25%) of the donation from HMRC if the donor makes a declaration. The donor increases the basic rate band by the gross gift (100/80). The market value of gifts of land or quoted shares can be deducted from taxable income for full tax relief, and the charity pays no tax on the gift received.