Tax information and allowances

Here we outline some information on the 2017/18 taxation, legislation and HM Revenue and Customs (HMRC) practice which may affect you if you are saving, investing, or have a pension plan. Please note that this is general information and tax rules may vary depending on your individual circumstances and are subject to change. 

Pensions and tax

Paying into a pension plan attracts tax relief but there is a limit on how much you pay in before you face a tax charge known as the Annual Allowance. When you're ready to take your pension benefits, if all of your benefits exceed a Lifetime Allowance you may be subject to a tax charge. For most people the Lifetime Allowance isn't a problem. You may also have to pay tax when you start taking an income from your pension.

Understanding all of the tax rules can be very complicated so we’ve prepared a guide to show how this may affect you. Our Questions & Answers document provides information such as:

  • Tax relief on pension contributions and the limits
  • Annual Allowance
  • Tapered Annual Allowance
  • Money Purchase Annual Allowance
  • Lifetime Allowance
  • Pensions Protection

You can also get more information on the website by visiting


Personal Tax

You’ll pay tax on income you receive over a certain amount, depending on the tax bands in place for a particular tax year.  The current tax rate you pay in each band if you have a standard Personal Allowance is:



Taxable income

Tax rate

Personal Allowance*

Up to £11,500


Basic rate

£11,501 to £45,000


Higher rate

£45,001 to £150,000


Additional rate

over £150,000


* The Personal Allowance can may be higher if you claim Marriage Allowance or Blind Person’s Allowance. Your Personal Allowance starts to reduce once your income reaches £100,000 and is lost when income exceeds £123,000.

For more details on Income Tax , please visit

If you are a Scottish Rate tax payer, your Personal Allowance is the same as the rest of the UK as well as your rate of income tax. However, the amount you can earn before paying higher rate tax will be £31,500 (totalling £43,000 which includes the £11,500 personal allowance). 

For more details on the Scottish Rate of Income Tax, please visit the

Inheritance Tax (IHT) is paid if a person’s estate (their property, money and possessions) is worth more than a certain amount when they die. This is called the ‘nil rate band Inheritance Tax threshold’ and is expected to remain unchanged at £325,000 until April 2021. The threshold is per person and any unused percentage of this can be passed between married couples and registered civil partners.

The Government has introduced a ‘residence nil-rate band’ from the 2017/18 tax year starting at £100,000. This will increase as follows:

  • £125,000 in 2018/19  tax year
  • £150,000 in 2019/20 tax year
  • £175,000 in 2020/21 tax year

This will be subject to a maximum estate valued at £2m. but  will be gradually withdrawn, or tapered away, for an estate valued at more than £2 million even if a home is left to direct descendants. This will be reduced by £1 for every £2 that the value of the estate is more than the £2 million taper threshold.

For more details on IHT, please visit:

Capital Gains Tax (CGT) is a tax on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value above your tax-free allowance (also known as Annual Exempt Amount). The allowance is as follows:



Individuals, personal representatives and trustees for disabled people


Other trustees


Whether you need to pay CGT and the actual amount you will depend on the type of asset you are selling and/or your tax situation. The following points show how to work out any CGT due:

  • your taxable income less your Annual Exempt Amount
  • work out the taxable gains
  • deduct the tax-free exemption from the total gain (£11,000 for the 2017/18 tax year)
  • add your taxable gain after exemption to the rest of your taxable income.
  • if this amount remains within the basic rate Income Tax band, you'll pay 10% on your gains (18% on secondary residential property)
  • any amount above this or if you're a higher rate tax payer, you'll pay 20% on gains from relevant assets (28% on secondary residential property).  

For more details, please visit:


The standard Personal Allowance is currently £11,500, which is the amount of income you can earn before you pay tax. This can may be higher if you claim Marriage Allowance or Blind Person’s Allowance or smaller if your income is over £100,000.

For more details on, please visit

Marriage Allowance

The Marriage Allowance allows individuals to transfer £1,150 of their Personal Allowance to a husband, wife or civil partner. To qualify, the lower earner needs to earn no more than £11,000 and their partner’s income is between £11,001 and £45,000. Also, both partners need to be born on or after 6 April 1935.

Married Couples Allowance

If either partner is born before 6 April 1935, the previous Married Couples Allowance still remains. The maximum amount of married couple’s allowance will be £8,445 per year (£3,260 minimum).

For more details, please visit

Savings, Investments and tax

Your Personal Savings Allowance, so the amount of income you can earn on your savings before you pay tax, depends on your tax situation. The current allowances are:



Basic rate

up to £1,000

Higher rate

up to £500

Additional rate


You will need to pay tax on any amounts above your allowance.  Although if your total taxable income is less than £17,000 you won’t pay any on income from your savings.

For more details on the personal savings allowance, please visit

Each tax year, there's a limit to the amount you can deposit into an Individual Savings Account (ISA), Junior ISA (JISA) and the new Lifetime ISA . The allowances apply to Cash ISAs, a Investment ISAs or a combination of the two. The ISA limits are:


Limits for 2017/18



Junior ISA


Lifetime ISA


For more details, please see our What is an ISA? page or visit

There’s an annual dividend zero rate taxation  for the first £5,000. The rates of tax on dividend income are:

Taxpayer band


Basic rate


Higher rate


Additional rate


For details on tax on Dividend Income by Trustees and how this may affect Trusts, please visit this information on the website.

Tax and allowances is a complicated subject so we’ve prepared a Questions & Answers document to help you understand how the changes may affect you. Alternatively, you may wish to speak to a financial adviser or visit HMRC or Money Advice Service for further information.


Need help? Have questions?

If you're looking for further information or want to chat about your product options, we can help.

Contact us