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Tax rates and allowances for 2015/16

Tax rates and allowances for 2015/16

Category: Money

Updated: 09/04/2015
First Published: 07/04/2015

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The start of the 2015/16 tax year means it's a great time to get your finances in order, and we're here to help. You can find a detailed overview of every tax limit you need to know about by reading our Tax Table for the 2015/16 financial year, but here's a quick rundown of the key limits that are likely to affect you.

  • Personal allowances

Your personal allowance, or the amount of income you can receive before being taxed, stands at £10,600 for the current financial year, up from £10,000 in 2014/15 (NB: those born before 6.4.1938 get a higher personal allowance of £10,660).

The income limit for personal allowance is £100,000 – the personal allowance is reduced by £1 for every £2 that your income exceeds this level, irrespective of age or date of birth.

The married couple's allowance stands at £8,355 (up from £8,165), while the newly-implemented marriage allowance is £1,060. There's also a blind person's allowance, which stands at £2,290 (up from £2,230 in 2014/15).

  • Income tax bands

Earnings between £0 and £31,785 above the personal allowance (equating to an annual income of up to £42,385) will be subject to basic rate tax of 20%. Earnings between £42,385 and £150,000 (or an annual income of £160,600) will be taxed at the higher rate of 40%, while earnings over £160,600 per annum are taxed at the additional rate of 45%.

  • Savings tax and allowances

Dividends are taxed at 10%, 32.5%, or 37.5% according to your nominal tax band, while other savings income is taxed at 0% (previously 10%) up to a limit of £5,000, up from last year's starting rate for savings income of £2,880.

Your ISA limit for the 2015/16 tax year is £15,240, up from £15,000 previously, while the Junior ISA limit is £4,080 (up from £4,000). The money can be saved in cash or stocks & shares (or a combination) with the returns being tax-free, however dividends earned on stocks & shares will still be taxed at 10%.

  • Pension contributions

The annual allowance (the amount you can save to qualify for tax relief) has been set at £40,000, unchanged from 2014/15, with any contributions made above this level being taxed at your marginal rate. The minimum earnings threshold to be auto-enrolled into a pension scheme stands at £10,000.

The lifetime allowance is £1,250,000, again unchanged from last year, with any pension in excess of this level potentially subject to a 25% charge plus income tax on balances drawn, or 55% for lump sum benefits (this will depend on when your pot reached the lifetime allowance limit).

  • Inheritance tax threshold

Assets worth up to £325,000 (classified as the "nil rate band") can be passed on tax-free, while anything over £325,000 will be taxed at 40%. Exclusions apply; read our guide for more details.

  • Stamp duty for residential land and buildings

Tax is applied proportionately, so the higher rate of tax will only be applied to the portion above the threshold, not the value of the whole property. The rates stand at:

0% for properties up to £125,000

2% for properties worth between £125,001 and £250,000

5% for properties worth between £250,001 and £925,000

10% for properties worth between £925,001 and £1.5m

12% for anything over £1.5m

  • Capital gains tax (CGT)

The annual exempt amount for individuals stands at £11,100, after which the standard rate of CGT stands at 18% for basic rate taxpayers (trustees and higher/additional rate taxpayers are charged at 28%). The annual exempt amount for trusts stands at £5,550, while entrepreneurs can benefit from a lower rate of 10%. The entrepreneurs' relief lifetime limit is set at £10,000,000.

What next?

Best cash ISAs

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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