Policy paper

Tax and tax credit rates and thresholds for 2015-16.

Published 3 December 2014

1. Bands of taxable income and corresponding tax rates

  2014-15 2015-16
  Per cent of income / £ a year  
Basic rate 20% 20%
Higher rate 40% 40%
Additional rate 45% 45%
Starting rate for savings income (*) 10% 0%
Dividend ordinary rate 10% 10%
Dividend upper rate 32.5% 32.5%
Dividend additional rate 37.5% 37.5%
Trust rate 45% 45%
Starting rate limit (savings income) £2,880 £5,000
Basic rate band £0 - 31,865 £0 - 31,785
Higher rate band £31,866 - 150,000 £31,786 - 150,000
Additional rate band Over £150,000 Over £150,000
(*) From 2008-09 there is a starting rate for savings income only. If an individual’s taxable non-savings income exceeds the starting rate limit, then the starting rate for savings will not be available for savings income.

2. Income tax allowances

  2014-15 2015-16 Change
  £ a year    
Personal Allowance      
those born after 5 April 1948 10,000 10,600 600
those born between 6 April 1938 and 5 April 1948 10,500 10,600 100
those born before 6 April 1938 10,660 10,660 -
Income limit for personal allowance (*1) 100,000 100,000 -
Income limit for personal allowances (born before 6 April 1948) (*2) 27,000 27,700 700
Married couple’s allowance (*3)      
maximum amount (*4) 8,165 8,355 190
minimum amount (*5) 3,140 3,220 80
Blind person’s allowance 2,230 2,290 60
Transferable Tax Allowance for married couples and civil partners (*6) - 1,060 -
*1 The personal allowance reduces where the individual’s income is above this limit by £1 for every £2 above the limit. This applies regardless of the individual’s date of birth.
*2 This allowance reduces where the individual’s income is above the income limit by £1 for every £2 above the income limit until it reaches the level of the personal allowance for someone born after 5 April 1948.
*3 Available to people born before 6 April 1935. Tax relief for this allowance is restricted to 10 per cent.
*4 This allowance is reduced when the individual’s income is above the income limit. This is at a rate of £1 for every £2 above the income limit until it reaches the minimum amount. Any reduction in the married couple’s allowance applies after any reduction to the individual’s personal allowance.
*5 This is also the maximum relief for maintenance payments where at least one of the parties is born before 6 April 1935.
*6 Available to spouses/ civil partners born after 5 April 1935. This allowance is 10% of the personal allowance for those born after 5 April 1938. It allows a spouse or civil partner who is not liable to income tax above the basic rate to transfer this amount of their personal allowance to their spouse/ civil partner. The recipient must not be liable to tax above the basic rate. The recipient is eligible to a tax reduction of 20% of the transferred amount.

3. National Insurance contribution thresholds

  2014-15 2015-16
  £ per week £ per week
Weekly Lower Earnings Limit (LEL) (*1) 111 112
Weekly Primary Threshold (PT) (*1) 153 155
Weekly Secondary Threshold (ST) (*2) 153 156
Upper Earnings (UEL) 805 815
Upper Profits Limit (UPL) 41,865 per year 42,385 per year
Upper Secondary Threshold for U21’s (*3) N/A 815
Small Earnings Exception (SEE)/Small Profits Threshold (SPT) (*1, *4) 5,885 5,965
Lower Profits Limit (LPL) (*1) 7,956 (per year) 8,060 (per year)
Employment Allowance 2,000 (per year, per employer) 2,000 (per year, per employer)
*1 These thresholds are uprated by CPI.
*2 The Weekly Secondary Threshold is uprated by RPI.
*3 Upper Secondary Threshold (UST) introduced from April 2015 for employees under the age of 21. The rate of secondary NICs for employees under the age of 21 on earnings between the ST and UST will be 0%.
*4 The Small Profits Threshold replaces the Small Earnings Exception from 6 April 2015.

4. Class 1 National Insurance contribution rates 2015-16

Employee (primary)   Employer (secondary)  
Earnings (*1) NIC rate (*2) Earnings (*1) NIC rate (*3 )
£ a week per cent £ a week per cent
Below £112 (LEL) 0 Below £156 (ST) 0
£112 – £155 (PT) (*4) 0 Above £156 (ST) 13.8
£155 - £815 (UEL) 12    
Above £815 2    
*1 The limits are defined as LEL - lower earnings limit; PT - primary threshold; ST - secondary threshold; and UEL - upper earnings limit.
*2 The contracted-out rebate for primary contributions is 1.4 per cent of earnings between the LEL and upper accrual point (UAP) of £770 for contracted-out salary-related schemes (COSRS).
*3 The contracted-out rebate for secondary contributions is 3.4 per cent of earnings between the LEL and UAP for COSRS.
*4 No National Insurance contributions (NICs) are actually payable but a notional Class 1 NIC is deemed to have been paid in respect of earnings between LEL and PT to protect contributory benefit entitlement.

5. Self-employed National Insurance contribution rates 2015-16

Annual profits (*1) (£ a year) Class 2 (*2) (£ a week) Class 4 (per cent)
Below £5,965 (SPT) (*3) 0.00 0
£5,965 to £8,060 (LPL) 2.80 0
£8,060 to £42,385 (UPL) 2.80 9
Above £42,385 2.80 2
*1 The limits are defined as SPT - small profits threshold; LPL - lower profits limit and UPL - upper profits limit.
*2 Class 2 NICs are paid at a weekly flat rate of £2.80 by all self employed persons unless they have profits below the small profits threshold. The rate is uprated by CPI
*3 The self-employed may pay Class 2 contributions if their profits are below the SPT.

6. Other NICs rates

  2014-15 2015-16
Married Women’s reduced rate (per cent) (*1) 5.85% 5.85%
Special Class 2 rate for share fishermen (*2) £3.40 per week £3.45 per week
Special Class 2 rate for volunteer development workers (*2) £5.55 per week £5.60 per week
Class 3 rate (*2, *3) £13.90 per week £14.10 per week
*1 Married Women’s Reduced Rate is paid only by married women and certain widows with valid reduced rate elections on earnings between PT & UEL and at 2% on earnings that exceed UEL.
*2 These rates are uprated by CPI
*3 Class 3 NICs can be paid by contributors to make the year a qualifying year for basic State Pension and Bereavement Benefit purposes.

7. Working and Child Credit Tax rates and thresholds

7.1 Working Tax Credit

  2014-15 2015-16 Change
  £ a year    
Basic Element 1,940 1,960 20
Couple and lone parent element 1,990 2,010 20
30 hour element 800 810 10
Disabled worker element 2,935 2,970 35
Severe disability element 1,255 1,275 20
Childcare element      
maximum eligible cost for one child £175 per week £175 per week 0
maximum eligible cost for two or more children £300 per week £300 per week 0
percent of eligible costs covered 70 per cent 70 per cent 0

7.2 Child tax credit

  2014-15 2015-16 Change
  £ a year    
Family element 545 545 0
Child element 2,750 2,780 30
Disabled child element 3,100 3,140 40
Severely disabled child element 1,255 1,275 20

7.3 Income thresholds and withdrawal rates

  2014-15 2015-16 Change
  £ a year    
Income threshold 6,420 6,420 0
Withdrawal rate (per cent) 41 41 0
First threshold for those entitled to Child Tax Credit only 16,010 16,105 95
Income rise disregard 5,000 5,000 0
Income fall disregard 2,500 2,500 0

8. Child Benefit and Guardian’s Allowance

  2014-15 2015-16 Change
  £ per week    
Child Benefit      
First Child 20.50 20.70 0.20
Second and subsequent children 13.55 13.70 0.15
Guardian’s Allowance 16.35 16.55 0.20

9. Tax-free Savings Accounts

  2014-15 2015-16
  £ a year  
Individual Savings Account (ISA) subscription limit 15,000 (*1) 15,240
Junior ISA subscription limit 4,000 (*2) 4,080
Child Trust Fund (CTF) subscription limit 4,000 (*2) 4,080
*1 Took effect from 1 July 2014. Between 2 April and 30 June 2014 the total annual subscription limit for 2014-15 was £11,880 of which up to £5,940 could be placed in a cash ISA.
*2 Took effect from 1 July 2014. Between 2 April and 30 June 2014 the Junior ISA and CTF annual subscription limit for 2014-15 was £3,840.

10. Fuel benefit charge

  2014-15 2015-16
Car fuel benefit charge multiplier £21,700 £22,100
Van fuel benefit charge £581 £594

11. Van benefit charge

  2014-15 2015-16
Van benefit charge £3,090 £3,150