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Personal Tax Allowances and Rates 2016/17

We've listed the various tax rates, personal tax free allowances, national insurance bands which have been updated now for the 2016/2017 Tax Year

Check out how 2016/17 changes will affect your pay. Includes changes to marriage allowances. Try it out & spread the word. Feedback to support@listentotaxman

The tax rates, thresholds and allowances for the 2016-2017 UK PAYE Tax Year (commencing April 6th) are now integrated into the calculator. It includes changes to marriage allowances. As usual, any bugs or errors identified by you; I would appreciate an email so that I can make any necessary corrections.  Try it out & spread the word. Feedback to support@listentotaxman.com

From April 2017 the Personal Tax Free Allowance will increase to £11,500, but for this coming tax year it is £11,000. An increase in the Higher Rate Threshold had been expected for 2017, but it has actually increased more than predicted. From April 2017 it will be £45,000. For the coming 2016/17 financial year it will be £43,000.

Personal Allowances

 

Allowance2015/162016/17Change
Basic £10,600 £11,000 + £400
People born between 6th April 1938 - 5th April 1948 £10,600 £11,000 + £400
People born before 6th April 1938 £10,600 £11,000 +£340
Married Couples Allowance ( if born before 6th April 1935) £8,355 £8,355 none
Blind Person's Allowance £2,290 £2,290 none
Transferable personal allowance between spouse * £1,060 1,100 +£40

* An annual transferable allowance between spouses of £1,060 was introduced for 2015/16 tax year. This year, 2016/17 the transferable allowance increases by £40 to £1,100. A spouse or civil partner who is not liable to income tax above the basic rate may transfer £1,1000 of their unused personal allowance to their spouse/civil partner, provided that the recipient of the transfer is not liable to income tax above the basic rate. This measure will only be of benefit to those in the lower income bracket.

The increase in the Basic Personal Allowance by £400 to £11,000 a year will certainly be appreciated by lower income families. 

From 2016-17 onward, 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

The Age Related Income Limit for 2016/17 is £27,000. if you are over 65 years and your earnings are above £27,000, your Personal Allowance will be reduced by £1 for every £2 you earn over that £27,000 limit.

 Tax Brackets

 

Tax Rate2015/162016/17Change
Basic rate 20% £0 -£31,785 £0 -£32,000 widened by £215
Higher Rate 40% £31,786 - £150,000 £32,001 - £150,000 cut by £215
Additional Rate 45% £150,001+ £150,001+ no change
NOTE: These rates are applied after your tax free allowance has been deducted from your gross wage.

The widening of the Basic Rate tax bracket and the increase in the Basic Personal Allowance means you can earn more this coming tax year before crossing into the 40% tax bracket. If you take the new Basic Tax Rate threshold of £32,000 and add it it the new Basic Personal Allowance of £11,000, we see that for 2016/17 you can earn £43,000 before you cross in to 40% tax territory. Last year, 2015/16, this figure was £42,385 and for 2014/15 it was £41,865. So you can earn £615 more this year, before crossing into the 40% bracket, than you could have last year. There has been no increase or change in the tax rates. But changes to the tax brackets themselves will mean that less taxpayers will be paying the higher rate of tax (40%) in 2016/17. The 20% tax bracket has widened by another £215, last year it had been cut by £80, so this is good news for those hovering around the higher rate threshold.

Change in take home pay after tax and NI

Gross WageNet 2015/16Net 2016/17Difference
£10,000 £9,767 £9,767 none
£20,000 £16,687 £16,767 +£80
£30,000 £23,487 £23,567 +£80
£40,000 £30,287 £30,367 +£80
£50,000 £36,326 £36,466 +£140
£75,000 £50,826 £50,966 +£140
£100,000 £65,326 £65,466 +£140
£125,000 £75,586 £75,566 -£19
£150,000 £90,086 £90,066 -£19

Source listentotaxman.com

National Insurance

There have been no changes to the percentage of National Insurance Class 1 contributions, they remain at 12% for employees, and 2% above the upper earnings limit. Employers Class 1 have remained the same at 13.8%. The limits and thresholds have changed, as illustrated in the table below. See HMRC for a more detailed view of NIC changes to other Classes.

National Insurance Bands

Description2015/162016/17
Weekly Lower earnings limit, primary Class 1 £112 £112
Weekly Upper earnings limit, primary Class 1 £815 £827
Weekly Primary threshold £155 £155
Weekly Secondary threshold £156 £156
Weekly Upper Secondary Threshold for U21’s £815 £827

This article was published in our Tax Rates & Tables section on 26/04/2016.

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