All of the latest information on this year’s tax rates and allowances is available in the downloadable guide below.

We cover Capital Gains Tax Rates, Car Fuel Benefits, Corporation Tax Rates, Income Tax Rates & Allowances, ISA Allowance 2015-16, Mileage Allowance, National Insurance Rates and VAT Fuel Scale Charges. This information has been provided by HMRC.

Capital Allowances

If you’re in business you can claim tax allowances, also known as capital allowances, on certain purchases or investments that you make on business assets. You cannot directly deduct your expenditure on those assets when calculating your profits or losses; instead, you can deduct a capital allowance. This applies whether you’re self-employed and pay income tax or are a company or organisation that’s liable for Corporation Tax.

Business assets such as office equipment, furniture and machines or tools, may be considered to be plant and machinery for capital allowance purposes, and expenditure on them might qualify for plant and machinery allowances. Tools, machinery, vehicles and other equipment you own (having bought them for your business) will generally qualify for plant and machinery allowances.

Annual investment allowance (AIA)

Most businesses can claim an AIA for expenditure on most plant and machinery, apart from cars. In many cases (depending on your level of expenditure) this may mean that you can claim your entire expenditure on qualifying items against this allowance. AIA only applies for expenditure incurred on or after 1 April 2008 for Corporation Tax or 6 April 2008 for income tax.

First-year allowances (some known as enhanced capital allowances/ECAs)

There are 100% first-year allowances available for expenditure on specific types of asset. This means you can claim the full expenditure on these assets as a deduction when calculating your taxable profit or loss for the accounting period when you spent the money, if all the conditions are met. Qualifying first-year allowances are:

  • New, unused cars with CO2 emissions of not more than 110 grams per kilometre driven.

  • Certain environmentally beneficial, currently water efficient, equipment.

  • Equipment for refuelling vehicles with natural gas, biogas or hydrogen fuel.

  • New zero-emission goods vehicles, such as electric vans.

  • Certain designated energy-efficient equipment.

Writing-down allowances (WDA)

WDA are annual allowances that reduce, or ‘write down’ any balance of capital expenditure on plant and machinery that you haven’t been able to claim either the annual investment allowance or a first-year allowance for, and on residual balances of expenditure that you have carried forward from the previous accounting period.

VAT

Simply put, valued added tax (VAT) is a tax assessed on the supply of goods and services.

Rates

There are different rates of VAT that apply to different types of goods and services and there are some goods and services that are exempt from VAT. There are three VAT rates:

  • Standard rate – 20 per cent.

  • Reduced rate – 5 per cent.

  • Zero rate – 0 per cent.

The rates of VAT may change from time to time – the changes are usually announced in the Budget. So you’ll need to check regularly to make sure you’re using the correct VAT rates. If you’re in business, you must register for VAT if your VAT taxable turnover for the previous 12 months is more than £79,000. This figure is known as the VAT registration threshold. The threshold changes usually once a year, so you should regularly check your turnover against the current threshold. You must also register for VAT if either of the following applies:

  • you think your VAT taxable turnover may go over the threshold in the next 30 days alone.

  • you take over a VAT-registered business as a going concern.

Deregistration threshold

The deregistration threshold is £77,000. If your VAT taxable turnover for the year is less than or equal to £77,000, or if you expect it to fall to £77,000 or less in the next 12 months, you can either:


  • Stay registered for VAT.

  • Ask for your VAT registration to be cancelled.

If you decide to stay registered, you don’t have to do anything.

Thresholds for VAT accounting schemes

In contrast to standard VAT accounting, there are several alternative ways you can account for VAT that could save you time. Some of these VAT accounting schemes have been designed for specific trade sectors. Others have been designed to deal with more generic business issues. These are the current thresholds for the schemes where there are limits or restrictions on when you can join or must leave them.

Flat Rate Scheme

If you use standard VAT accounting, you have to record the VAT on every sale and purchase you make. You could simplify your VAT accounting by using the Flat Rate Scheme if both of the following are true:


  • Your estimated VAT taxable turnover – excluding VAT – in the next year will be no more than £150,000.

  • Your estimated total business income – including VAT – in the next year will be no more than £191,500.

If you use a Flat Rate Scheme, you don’t have to keep a record of the VAT that you charge on every sale or pay on every purchase. You calculate your VAT payments as a percentage of your total VAT-inclusive turnover. Once on the scheme you may continue to use it to account for VAT until your total business income exceeds £230,000.

Cash Accounting Scheme

If you use standard VAT accounting, you have to pay HMRC the VAT you charged on your sales whether or not your customer has paid you. If you use cash accounting, you only pay VAT when your customer pays you. However, you can only reclaim VAT once you’ve paid your suppliers. You can use cash accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. Once you’re using cash accounting, you can keep using it until your turnover exceeds £1.6 million.

Annual Accounting Scheme

If you use standard VAT accounting, you’ll have to complete a VAT Return and pay any VAT due, or get any refunds, quarterly. You can reduce your paperwork and make it easier to manage your cash flow by using the Annual Accounting Scheme. If you use the scheme then you:


  • Make nine monthly, or three quarterly, interim payments during the year.

  • Only need to complete one return at the end of the year.

  • Either make a balancing payment or receive a balancing refund at the end of the year.

You can use annual accounting if you estimate that your turnover during the next tax year will be no more than £1.35 million. Once you’re using annual accounting, you can keep using it until your turnover is more than £1.6 million.

Retail schemes

If you’re a retailer, and you can’t account for VAT in the normal way, you can simplify your VAT accounting by using a retail scheme. A retail scheme can be standard or bespoke. You can use one of the published schemes if your annual retail turnover – excluding VAT – is under £100 million. There are lower limits for some standard schemes. If your turnover is higher than £100 million, you must agree a bespoke scheme. If you use a standard retail scheme, you will work out the VAT on your sales by using one of the following methods:


  • Point of sale.

  • Direct calculation.

  • Apportionment.

You will move onto a different direct calculation or apportionment scheme if your retail turnover – excluding VAT – rises to more than £1 million.

Flat Rate Scheme

These percentage rates will apply from 4 January 2011 until further notice.

Category of business Appropriate percentage
Accountancy/ book-keeping 14.5
Advertising 11
Agricultural services 11
Any other activity not listed elsewhere 12
Architect, civil and structural engineer or surveyor 14.5
Boarding or care of animals 12
Business services that are not listed elsewhere 12
Catering services including restaurants and takeaways 12.5
Computer and IT consultancy or data processing 14.5
Computer repair services 10.5
Dealing in waste or scrap 10.5
Entertainment or journalism 12.5
Estate agency/ property management services 12
Farming or agriculture that is not listed elsewhere 6.5
Film, radio, television or video production 13
Financial services 13.5
Forestry or fishing 10.5
General building or construction services* 9.5
Hairdressing or other beauty treatment services 13
Hiring or renting goods 9.5
Hotel/ accommodation 10.5
Investigation/ security 12
Labour-only building or construction services* 14.5
Laundry/ dry-cleaning services 12
Lawyer/ legal services 14.5
Library, archive, museum or other cultural activity 9.5
Management consultancy 14
Manufacturing fabricated metal products 10.5
Manufacturing food 9
Manufacturing that is not listed elsewhere 9.5
Manufacturing yarn, textiles or clothing 9
Membership organisation 8
Mining/ quarrying 10
Packaging 9
Photography 11
Post offices 5
Printing 8.5
Publishing 11
Pubs 6.5
Real estate activity not listed elsewhere 14
Repairing personal or household goods 10
Repairing vehicles 8.5
Retailing food, confectionary, tobacco, newspapers or children’s clothing 4
Retailing pharmaceuticals, medical goods, cosmetics or toiletries 8
Retailing that is not listed elsewhere 7.5
Retailing vehicles or fuel 6.5
Secretarial services 13
Social work 11
Sport/ recreation 8.5
Transport or storage, including couriers, freight, removals and taxis 10
Travel agency 10.5
Veterinary medicine 11
Wholesaling agricultural products 8
Wholesaling food 7.5
Wholesaling that is not listed elsewhere 8.5
*’Labour-only building or construction services’ means building or construction services where the value of materials supplied is less than 10 per cent of relevant turnover from such services; any other building or construction services are ‘general building or construction services’.