Policy paper

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

Published 3 December 2014

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

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