UK Tax Thresholds
We have compiled the various thresholds and rates for UK tax. This page serves as a suplementary resource to our articles as well as a comprehensive overview of UK tax rates and thresholds. The thresholds on this page are:
England, Wales & NI Income Tax Thresholds
Tax is paid on the amount of taxable income remaining after allowances have been deducted.
Scotland Income Tax Thresholds
Below are the thresholds for a Scottish nationals income tax and their appropriate tax rates.
Tax on Dividends
You can earn some dividend income each year without paying tax.
You do not pay tax on any dividend income that falls within your Personal Allowance (the amount of income you can earn each year without paying tax).
You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance.
Working out tax on dividends
How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.
To work out your tax band, add your total dividend income to your other income. You may pay tax at more than one rate.
See table above.
Tax band | Tax rate on dividends over the allowance |
---|---|
Basic rate | 7.5% |
Higher rate | 32.5% |
Additional rate | 38.1% |
Tax on dividends before 6 April 2016
The table below displays the dividend tax rates from 6 April 2010 to 5 April 2016.
How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.
Again, see table above and filter the appropriate tax year.
Tax band | Effective dividend tax rate |
---|---|
Basic rate (and non taxpayers) | 7.5% |
Higher rate | 32.5% |
Additional rate (from 6 April 2013) | 38.1% |
Additional rate (dividends paid before April 2013) | 42.5% |
Individual Savings Accounts (ISA)
There are 4 different types of ISA according to the HMRC
- Cash ISA
- Stocks & shares ISA
- Innovative ISA
- Lifetime ISA
The HMRC state that you do not need to pay tax on:
- Interest on cash in an ISA
- Income or capital gains from investments in an ISA
ISA Savings Thresholds
You are entitled to put money into one of each type of ISA every tax year.
During the tax year you can save up to £20,000 in one type of account or split this figure across your own selection of the accounts listed above. For example:
You could save £7,000 in a stocks & shares ISA, £11,000 in a cash ISA, £1,000 in a lifetime ISA and £1,000 in a Innovative ISA. Alternatively you could save te whole £20,000 into a cash ISA
!Important: You can save a maximum of £4,000 into a lifetime ISA due to their nature, which would still deduct from the £20,000 ISA allowance.
Lifetime Savings ISA's
The Lifetime ISA is a government backed ISA to be saved into long term for the benifit of either:
- Buying your first home
- Saving for Later Life, i.e retirement
Maximum Annual Contribution | Government Bonus | Maximum Annual Government Bonus |
---|---|---|
£4,000 | 25% | £1,000 |
You are entitled to save a maximum of £4,000 a year into a Lifetime savings ISA. The government will top this up with an annual 25% bonus, capped at £1,000
The HMRC also state:
"When you turn 50, you will not be able to pay into your Lifetime ISA or earn the 25% bonus. Your account will stay open and your savings will still earn interest or investment returns."
Lifetime ISA Eligibility & Withdrawral Requirements
To contribute to a Lifetime Savings ISA you must:
- Be over 18
- Be under 40
You can only withdraw the money from your ISA if you're:
- Buying your first home
- Aged 60 or older
- Terminally ill, with less than 12 months to live
If you decide to withdraw some or all of the money within your Lifetime ISA before you meet any of the above eligibility requirements, you will be required to pay a 25% withdrawral charge.
For a more detailed description of Lifetime Savings ISAs and their terms and conditions visit the HMRCs website
Tax thresholds on savings interest
You may be entitled to earn a portion of interest on your savings without it incresing your tax liability.
Your interest free tax allowances are listed below:
- Personal Allowance (View the personal allowance thresholds above)
- Starting rate for Savings
- Personal Savings Allowance
Starting Rate for Tax free Savings Interest
You may qualify for up to £5,000 of tax free interest off of your savings
Annual Income | Do you qualify |
---|---|
Less than £17,570 | Yes, to a maximum of £5,000. |
Greater than £17,570 | No |
It is worth noting that the starting amount for tax free savings interest gets reduced by £1 for every £1 you earn over the personal allowance threshold
Personal Savings Allowance
You may qualify for up to £1,000 of tax free interest off of your savings depending on your income tax band
Income Tax Band | Personal Savings Allowance |
---|---|
Basic rate | £1,000 |
Higher Rate | £500 |
Additional Rate | £0 |
For more on tax free savings interest visit the Government Website
Marriage Allowance
Marriage allowance allows the lesser earning partner to transfer a portion of their personal allowance across to the higher earning partner.
The maximum amount transferable in 2021/2022 is £1,260
- You are married or in a civil partnership
- The lesser earning partner does not pay Income Tax or their income is below their Personal Allowance (View the income tax thresholds for the appropriate tax year above)
- The higher earning partner pays income tax at the basic rate in the UK. In Scotland the higher earner must pay the starter, basic or intermediate rate of tax.
For more on Marriage Allowance visit the Government Website
Payroll Giving Tax Relief
Payroll Giving allows you to donate a portion of your PAYE income to charity allowing you a marginal tax relief on the amount donated
The tax relief you get depends on your taxation threshold and your geographical location within the United Kingdom
England, Wales and Northern Ireland:
Tax band | Tax owed after £1 Donation |
---|---|
Basic rate | 80p |
Higher Rate | 60p |
Additional rate | 55p |
Scotland:
Tax band | Tax owed after £1 Donation |
---|---|
Starter Rate | 81p |
Basic Rate | 80p |
Intermediate Rate | 79p |
Higher Rate | 59p |
Additional Rate | 54p |