Income tax bands and rates are as follows:
Income 2022/23 Income 2021/22
Tax rate band
(GBP) (GBP)
Starting rate for savings: 0%
0 to 5,000 0 to 5,000
*
Basic rate: 20% 0 to 37,700 0 to 37,700
Higher rate: 40% 37,701 to 150,000 37,701 to 150,000
Additional rate: 45% Over 150,000** Over 150,000**
* The 0% starting rate is for savings income only. If non-savings income (which takes up the
first ‘slice’ of income) is above this limit, then the 0% starting rate will not apply.
** From 6 April 2023 the additional rate threshold will be reduced to GBP 125,140.
Note that dividends are always treated as the top slice of income and will be taxed at an
individual's highest marginal tax rate.
Savings income’ is the next slice down, and other income (such as earnings) will be the
lowest slice. The most common form of ‘savings income’ is interest, but certain other forms
of income are also included.
A dividend allowance applies to the first GBP 2,000 of an individual’s dividend income in
2022/23. The allowance operates as a 0% tax rate. From 6 April 2023 the dividend allowance
will be reduced to GBP 1,000 and reduced to GBP 500 from 6 April 2024.
The dividend allowance does not reduce total income for tax purposes. Dividend income that
is within the ‘allowance’ still counts towards an individual’s basic and higher rate limits
VAT REGISTRATION
. Businesses have to register for VAT if their VATtaxable turnover is more than £85,000.
They can also choose to register if their turnover is less than £85,000.
Capital Gains Tax rates
You pay a different rate of tax on gains from residential property than you do on
other assets.
You do not usually pay tax when you sell your home.
If you pay higher rate Income Tax
If you’re a higher or additional rate taxpayer you’ll pay:
28% on your gains from residential property
20% on your gains from other chargeable assets
If you pay basic rate Income Tax
If you’re a basic rate taxpayer, the rate you pay depends on the size of your gain,
your taxable income and whether your gain is from residential property or other
assets
1. If this amount is within the basic Income Tax band you’ll pay 10% on your
gains (or 18% on residential property). You’ll pay 20% (or 28% on residential
property) on any amount above the basic tax rate.
. If you have gains from both residential property and other assets
You can use your tax-free allowance against the gains that would be charged at the
highest rates (for example where you would pay 28% tax).
If you’re a trustee or business
Trustees or personal representatives of someone who’s died pay:
28% on residential property
20% on other chargeable assets
You’ll pay 10% if you’re a sole trader or partnership and your gains qualify
for Business Asset Disposal Relief.
STAMP DUTY
Residential property rates
You usually pay Stamp Duty Land Tax (SDLT) on increasing portions of the property
price when you buy residential property, for example a house or flat.
SDLT only applies to properties over £250,000.
The amount you pay depends on:
when you bought the property
how much you paid for it
whether you’re eligible for relief or an exemption
Rates for a single property
You pay stamp duty at these rates if, after buying the property, it is the only
residential property you own. You usually pay 3% on top of these rates if you
own another residential property.
Property or lease premium or transfer value SDLTrate
Up to £250,000 Zero
The next £675,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 to £1.5 million) 10%
The remaining amount (the portion above £1.5 million) 12%
If you’re buying your first home
You can claim a discount (relief) if the property you buy is your first home. This
means you’ll pay:
no SDLT up to £425,000
5% SDLT on the portion from £425,001 to £625,000
You’re eligible if you and anyone else you’re buying with are first-time buyers.
If the price is over £625,000, you cannot claim the relief. Follow the rules for people
who’ve bought a home before.
New leasehold sales and transfers
When you buy a new residential leasehold propertyyou pay SDLT on the purchase
price of the lease (the ‘lease premium’) using the rates above.
If the total rent over the life of the lease (known as the ‘net present value’) is more
than the SDLTthreshold (currently £250,000), you’ll pay SDLT at 1% on the portion
over £250,000.
This does not apply to existing (‘assigned’) leases.
Higher rates for additional properties
You’ll usually have to pay 3% on top of SDLT rates if buying a new residential
property means you’ll own more than one.
If you’re replacing your main residence
You will not pay the extra 3% SDLT if the property you’re buying is replacing your
main residence and that has already been sold.
If you have not sold your main residence on the day you complete your new
purchase you’ll have to pay higher rates. This is because you own 2 properties
You can apply for a refund if you sell your previous main home within 36 months.
Corporation Tax rates
The rate of Corporation Tax you pay depends on how much profit your company
makes.
Rates for Corporation Tax years starting 1 April
There are different rates for ring fence companies.
Rate 2023 2 2 2 2 2 2 20
0 0 0 0 0 0 16
2 2 2 1 1 1
2 1 0 9 8 7
Small 19% — — — — — — —
profits
rate
(comp
anies
with
profits
under
£50,0
00)
Main 25% — — — — — — —
rate
(comp
anies
with
profits
over
£250,
000)
Main — 1 1 1 1 1 1 20
rate 9 9 9 9 9 9 %
(all % % % % % %
profits
excep
t ring
fence
Rate 2023 2 2 2 2 2 2 20
0 0 0 0 0 0 16
2 2 2 1 1 1
2 1 0 9 8 7
profits
)
Margi £50, — — — — — — —
nal 000
Relief
lower
limit
Margi £250 — — — — — — —
nal ,000
Relief
upper
limit
Stand 3/20 — — — — — — —
ard 0
fractio
n
Speci 20% 2 2 2 2 2 2 20
al rate 0 0 0 0 0 0 %
for % % % % % %
unit
trusts
Rate 2023 2 2 2 2 2 2 20
0 0 0 0 0 0 16
2 2 2 1 1 1
2 1 0 9 8 7
and
open-
ended
,
invest
ment
comp
anies
From 1 April 2023, there is no longer a single Corporation Tax rate for non-ring fence
profits.
At the Spring Budget 2021, the government announced that the Corporation Tax
main rate for non-ring fence profits would increase to 25% for profits above
£250,000.
A small profits rate of 19% was also announced for companies with profits of
£50,000 or less.
Companies with profits between £50,000 and £250,000 will pay tax at the main rate,
reduced by a marginal relief. This provides a gradual increase in the effective
Corporation Tax rate.
For profits from 1 April 2023, use the Marginal Relief calculator to work out how
much Marginal Relief you can claim on your Corporation Tax.
Ring fence companies
There are different Corporation Tax rates for companies that make profits from oil
extraction or oil rights in the UK or UK continental shelf. These are known as ‘ring
fence’ companies.
For periods up to 31 March 2023, ring fence companies can claim Marginal Relief on
profits between £300,000 and £1.5 million. From 1 April 2023, Marginal Relief is
available for companies with profits between £50,000 and £250,000.
Rate 2023 2015
to
2022
Small ring fence profits rate 19% —
(companies with profits under £50,000)
Main ring fence profits rate 30% —
(companies with profits over £250,000)
Small ring fence profits rate — 19%
(companies with profits under £300,000)
Main rate ring fence — 30%
(companies with profits over £1,500,000)
Ring fence fraction 11/400 11/400
