Accounts Tax Vat

Accounts, Tax and Vat explained in plain English

Tax Rates

Tax in the UK has a number of key areas, the main being income tax and corporation tax.  Sole trader and partnership income is dealt with via income tax and company profits are dealt with via corporation tax.

In addition to these two types of tax are PAYE, National Insurance, Inheritance Tax, Capital Gains tax and VAT (plus a couple of other smaller areas).

Below are the historic and current tax rates for the UK for the areas listed above (apart from VAT which are detailed on the VAT rates page).

Income Tax

Income Tax falls into the following areas known as schedules:

  • Schedule A (tax on income from United Kingdom land)
  • Schedule B (tax on commercial occupation of land)
  • Schedule C (tax on income from public securities)
  • Schedule D (tax on trading income, income from professions and vocations, interest, overseas income and casual income)
  • Schedule E (tax on employment income)
  • Schedule F (tax on United Kingdom dividend income)

Historic income tax rates

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Corporation Tax

Corporation Tax or CT for short.

Historic corporation tax rates

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PAYE Tax

PAYE Tax …….

Historic PAYE tax rates

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National Insurance Tax

National insurance falls into the following areas known as classes:

  • Class 1 (payable by employers and employees and include Class 1A nad Class 1B)
  • Class 2 (payable by the self employed – fixed weekly amounts)
  • Class 3 (voluntary contributions)
  • Class 4 (payable by the self employed – based on profits)
Historic national insurance tax rates

Class 1

Period LEL UEL Over UEL
1978-1979 N/A 6.5% to the upper limit
1979-1980 N/A 6.75% to the upper limit
1980-1981 N/A 7.75% to the upper limit
1981-1982 N/A 8.75% to the upper limit
1982-1989 N/A 9.0% to the upper limit
1989-1994 2% 10.0% to the upper limit
1995-1999 2% 10.0% to the upper limit
1999-2003 0% 10.0% to the upper limit
2003-2011 0% 11.0% to the upper limit 1%
2011-2014 0% 12.0% to the upper limit 2%

Class 2

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Class 3

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Class 4

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Inheritance Tax

Inheritance Tax (IHT) was introduced in the UK from 18 March 1986 to replace the old Capital Transfer Tax.

Below are the historic and current inheritance tax rates for the UK, for the current capital gains tax rates see the link at the end of this page

Historic inheritance tax rates

From To Threshold/nil rate band
06.04.09 05.04.15 325,000
06.04.08 05.04.09 312,000
06.04.07 05.04.08 300,000
06.04.06 05.04.07 285,000
06.04.05 05.04.06 275,000
06.04.04 05.04.05 263,000
06.04.03 05.04.04 255,000
06.04.02 05.04.03 250,000
06.04.01 05.04.02 242,000
06.04.00 05.04.01 234,000
06.04.99 05.04.00 231,000
06.04.98 05.04.99 223,000
06.04.97 05.04.98 215,000
06.04.96 05.04.97 200,000
06.04.95 05.04.96 154,000
10.03.92 05.04.95 150,000
06.04.91 09.03.92 140,000
06.04.90 05.04.91 128,000
06.04.89 05.04.90 118,000
15.03.88 05.04.89 110,000
17.03.87 14.03.88 90,000
18.03.86 16.03.87 71,000

Capital Gains Tax

Capital Gains Tax (CGT) was introduced back in 1965 by the then Chancellor James Callaghan to stop people avoiding income tax by switching their income into capital.

Below are the historic capital gains tax rates for the UK, for the current capital gains tax rates see the link at the end of this page.

Historic capital gains tax rates

1980-81 to 2006-07
Annual exempt amount Rate of tax chargeable on excess of gains over annual exempt amount
Year Individuals Trusts Individuals Discretionary & accumulation trusts Interest in possession trusts & personal representatives
1980-81 3,000 1,500 30% 30% 30%
1981-82 3,000 1,500 30% 30% 30%
1982-83 5,000 2,500 30% 30% 30%
1983-84 5,300 2,650 30% 30% 30%
1984-85 5,600 2,800 30% 30% 30%
1985-86 5,900 2,950 30% 30% 30%
1986-87 6,300 3,150 30% 30% 30%
1987-88 6,600 3,300 30% 30% 30%
1988-89 5,000 2,500 income tax rates Trust rate Basic rate of income tax
1989-90 5,000 2,500 income tax rates Trust rate Basic rate of income tax
1990-91 5,000 2,500 income tax rates Trust rate Basic rate of income tax
1991-92 5,500 2,750 income tax rates Trust rate Basic rate of income tax
1992-93 5,800 2,900 income tax rates Trust rate Basic rate of income tax
1993-94 5,800 2,900 income tax rates Trust rate Basic rate of income tax
1994-95 5,800 2,900 income tax rates Trust rate Basic rate of income tax
1995-96 6,000 3,000 income tax rates Trust rate Basic rate of income tax
1996-97 6,300 3,150 income tax rates Trust rate Basic rate of income tax
1997-98 6,500 3,250 income tax rates Trust rate Basic rate of income tax
1998-99 6,800 3,400 income tax rates Trust rate Trust rate
1999-00 7,100 3,550 income tax rates Trust rate Trust rate
2000-01 7,200 3,600 income tax rates Trust rate Trust rate
2001-02 7,500 3,750 income tax rates Trust rate Trust rate
2002-03 7,700 3,850 income tax rates Trust rate Trust rate
2003-04 7,900 3,950 income tax rates Trust rate Trust rate
2004-05 8,200 4,100 income tax rates Trust rate Trust rate
2005-06 8,500 4,250 income tax rates Trust rate Trust rate
2006-07 8,800 4,400 income tax rates Trust rate Trust rate

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