Plant and Machinery - Annual Investment Allowance (AIA)
The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long-life assets, but not cars, of up to £200,000 p.a. for expenditure incurred on or after 1st January, 2016. The previous rate was £500,000 p.a. Special rules apply to accounting periods straddling this date.
Any costs over the AIA fall into the normal capital allowance pools below. The AIA may need to be shared between certain businesses under common ownership.
Other plant and machinery allowances - The annual rate of allowance is 18%. An 8% rate applies to expenditure incurred on integral features and on long-life assets.
A 100% first year allowance may be available on certain energy efficient plant and cars, including expenditure incurred on new and unused zero-emission goods vehicles.
Cars - For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools. Cars with CO2 emissions not exceeding 130gm/km receive an 18% allowance p.a. Cars with CO2 emissions of more than 130gm/km receive an 8% allowance p.a. Cars with CO2 emissions of more than 130gm/km receive a 8% allowance p.a. The emissions figure is reduced to 110gm/km for expenditure incurred on or after 1st April, 2018.
*Or 90% of weekly earnings if lower.
Different rates apply for ring-fenced (broadly all industry) profit
Tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earning (max £40,000). Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual. The £40,000 limits may be reduced where ‘Adjusted Income’ exceeds £150,000.
The limited may be reduced to £4,000 once money purchase pensions are accessed. Where the £40,000 limit is not fully used, it may be possible to carry the unused amount forward for three years.
Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’.
Land and Buildings in England, Wales, and N. Ireland
The rates apply to the portion of the total value which falls within each band.
*Rates may be increased by 3% where further residential properties costing £40,000 or more are acquired.
SDLT is charged at 15% of interests in residential dwellings costing more than £500,000 purchased by certain non-natural persons.
Shares and Securities – Rate 0.5%
Disclaimer – Rates are for guidance only. No responsibility for loss associated by any person acting/refraining from action as a result of this information can be accepted by the authors or firm.
† For Scottish taxpayers only, the limit is £31,500
* Only applicable to savings income. The rate is not available if taxable non-savings income exceeds £5,000. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax free.
** Except dividends 7.5%.
*** Except dividends 32.5%.
**** Except dividends 38.1%.
Other income is taxed first, then savings income, and finally dividends. The first £5,000 of dividends are tax free.
*For higher and additional rate taxpayers
**Higher rates (18/28%) may apply to the disposal of certain residential property and carried interest.
Entrepreneurs’ Relief and Investors’ Relief
The first £10m of qualifying gains are charged at 10%. Gains in excess of the limit are charged at the rates detailed above.
2017/18 Class 1 (Employed) Rates
*Entitlement to contribution-based benefits for earnings between £113 and £157 per week.
** The rate is 0% for employees under 21 and apprentices under 25 on earnings up to £866 per week.
For 2017/18, a further nil rate band of £100,000 may be available in relation to current or former residence. Nil rate bands of surviving spouse/civil partners may be increased by unused nil rate bands of deceased spouses/civil partners.
Reduced Charge on Gifts within Seven Years of Death
*Rounding down to the nearest 5gm/km does not apply.
For diesel cars, add a 3% supplement but maximum still 37%.
For cars registered before 1st January, 1998, the charge is based on engine size.
The list price includes accessories and is not subject to an upper limit.
The list price is reduced for capital contributions made by the employee up to £5,000.
Special rules may apply to cars provided for disabled employees.
Car Fuel Benefit 2017/18
£22,600 x “appropriate percentage”*
*Percentage used to calculate benefit of the car for which the fuel is provided.
The charge does not apply to certain environmentally friendly cars.
The charge is proportionately reduced if provision of private fuel ceases part way through the year.
The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Van Benefit per Vehicle 2017/18
Van Benefit - £3,230
Fuel Benefit - £610
The charges do not apply to vans if a ‘restricted private use condition’ is met throughout the year.
A reduced charge may be due if the van cannot, in any circumstances, emit CO2 by being driven.
2017//18 and 2016/17
These rates represent the maximum tax-free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.
Disclaimer - for information of users
This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.