Tax Rates - Business / Personal - 2014/15 Tax Year

Tax Rates – Business / Personal – 2014/15 Tax Year

Here are the prevailing tax rates, bands and allowances for the 2014-15 tax year.

Corporation Tax

The headline rate (which applies to large companies with turnovers of £1.5m of more) is now 21%. It will fall to 20% from April 2015.
The small profits rate applies to companies which make profits of £300,000 or less per year, and remains unchanged.
If your company makes profits which span the CT thresholds, then a system of ‘marginal relief’ applies. You can find out more in our Corporation Tax guide.

Value Added Tax

The registration threshold level is £81,000, and the deregistration threshold is £79,000 (effective from 1st April 2014).

Income Tax – Personal Allowance

The personal allowance has risen to £10,000 – a significant rise from £9,440. It will rise further – to £10,500 – from April 6th 2015.
High earners beware, however, since for every £2 you earn over £100,000 per year, you lose £1 of the personal allowance, so the entire allowance will be removed if you earn £120,000 or more.

Income Tax Bands

Dividend Tax Rates

The same income tax bands listed above are used to calculate your dividend tax liability. Once the 10% tax credit is taken into account, the effective tax rate is listed in brackets):
The basic rate is 10% (0% – no further tax to pay as dividend owners receive a 10% tax credit automatically which cancels out the tax liability)
The higher rate is 32.5% (25%)
The additional rate is 37.5% (a cut from 42.5%) (30.55%)
For further information, try our tax on dividends overview.

National Insurance Contributions (NICs)

Limited companies and their employees are subject to Class 1 NICs. The self-employed (sole traders, partnerships) are liable to Class 2 and Class 4 NICs.
The employers’ NIC rate is 13.8% on weekly earnings above £153. From this tax year, eligible businesses can now reclaim up to £2,000 per year in Employers’ NIC costs from HMRC. See our guide to the new Employment Allowance for more details.
The employees’ NIC rate is 12% on earnings between £153 and £805 per week, and 2% on earnings above £805 per week.
Class 2 NICs are £2.75 per week.
Class 4 NICs are 9% of annual profits between £7,956 and £41,865 per year, and 2% on profits above £41,865 per year.
Try our guide to National Insurance for further information.

Pensions savings tax relief

Individual Savings Accounts (ISAs)

Stocks and Shares ISAs are to be abolished and replaced by a ‘New ISA’ – NISA.
From 1st July 2014, the total investment limit will rise significantly – to £15,000.

Capital Gains Tax

No changes to the standard and higher rates of CGT – which remain at 18% and 28% (same tax bands as income tax).
The lifetime limit for Entrepreneurs’ Relief remains £10m, and the tax rate remains at 10%.
Each individual as an annual CGT exemption of £11,000.

Inheritance Tax

The Inheritance Tax Threshold (IHT) stays at £325,000, above which all assets are taxed at 40%.
A combined threshold of £650,000 applies to civil partners / spouses.

Stamp Duty Land Tax

Corporation Tax allowances and reliefs

The Annual Investment Allowance (AIA) has been doubled to £500,000 – until the end of 2015.
Plant & Machinery – main rate remains at 18%, and the special rate stays at 8%.
First year allowances remain at 100%.

Business Rates

The England standard multiplier is 48.2p
The England ‘small business’ multiplier is 47.1p (if your property has a rateable value of £18,000 or less – or below £25,500 in Greater London).