Coronavirus Update

 

Whitechurch Blog: Tax Rates 2020/21

23rd March 2020

Income tax rates, national insurance rates and junior ISA limits have all been updated for the new tax year 2020/21. For the new figures and allowances, continue reading.

 

Income Tax Rates - England & Wales

Band (£) Rate
Basic rate (£12,501 - £50,000) 20%
Higher rate (£50,001 - £150,000) 40%
Additional rate (over £150,000) 45%

 

Income Tax Rates - Scotland

Band (£) Rate
Starter tax rate (£12,500 - £14,585) 19%
Basic tax rate (£14,586 - £25,158) 20%
Intermediate tax rate (£25,159 - £43,430) 21%
Higher tax rate (£43,431 - £150,000) 41%
Top rate (over £150,000) 46%

 

Income Tax Allowances

Personal allowance
Reduced if income is over £100,000
£12,500
Married couples /civil partners transferable allowance £1,250
Married couples /civil partners allowance
Maximum if at least one born before 6 April 1935
£9,075
Dividend allowance
Over £2,000 subject to special tax rates
£2,000
Personal savings allowance
£500 for higher rate tax payers
£1,000

 


National Insurance Rates

Class 1 Employees’ Rates
Weekly Earnings Rate
Up to £183 Nil
£183 to £962 12%
Over £962 2%
Class 1 Employers’ Rates
Weekly Earnings Rate
Up to £169  0%
Over £169* 13.8%
The annual allowance for smaller businesses only £4,000
Other Rates 
Class 1A Employer 13.8% on most benefits in kind not within Class 1
Class 2 Self-employed Flat rate £3.05 pw (on profits above £6,475)
Class 3 Voluntary Flat rate £15.00 pw
Class 4 Self-employed 9% on annual profits between lower profit limit of £9,500 and higher profit limit of £50,000.
2% on annual profits above £50,000.

 * Special rules for employees under 21 years old, or apprentices under 25 years old.


 

INHERITANCE TAX

Chargeable Transfers
Amount Death Rate Lifetime Rate  
Below £325,000

Nil

Nil

  
Over £325,000

40%*

20%

  
* 36% reduced death rate applies to taxable estates where 10% or more is left to charity.

Residence Nil Rate Band

Subject to certain conditions being met

£175,000  

Reliefs

Annual exemption £3,000

Marriage - Parent
- Grandparent
- Other
£5,000
£2,500
£1,000
Small gifts £250   
Reduced charge on gifts made within 3-7 years of death   
Years before death   0-3  3-4  4-5  5-6  6-7
% of death rate due 100  80   60   40   20

 

CAPITAL GAINS TAX

Individuals
Annual exemption amount
£12,300
Basic rate tax payer 10% *
Higher rate tax payer 20% *

Trusts
Annual exemption amount

Rate

 

£6,150

20%*

* Additional 8% may apply to the disposal of certain residential property and carried interest.

 

STAMP DUTY

Stamp duty - shares and securities 0.5%
Stamp duty reserve tax 0.5% / 1.5%
Stamp Duty Land Tax

England

Applies to England and Northern Ireland

 

Rate
0%
2%
5%
10%
12%

 

Residential*
£0 - £125,000
£125,001 - £250,000
£250,001 - £925,000
£925,001 - £1,500,000
Over £1,500,000

* Additional 8% may apply to the disposal of certain residential property and carried interest.
Land & Building Transaction Tax

Scotland
Applies to Scotland since 1 April 2015

 

 

 

Rate
0%
2%
5%
10%
12%
Residential*
£0 - 145,000
£145,001 - £250,000
£250,001 - £325,000
£325,001 - £750,000
Over £750,000

Land Transaction Tax

Wales
Applies to Wales since 1 April 2018

Rate

0%
3.5%
5%
7.5%
10%
12%

Residential*

£0 - £180,000
£180,001 - £250,000
£250,001 - £400,000
£400,001 - £750,000
£750,001 - £1,500,000
Over £1,500.000

* Rates may be increased by 3% for purchases of residential property where the purchaser already owns at least one residential property. (£40,000 or over in Scotland)

A charge of 15% applies to purchases of residential property by ‘non-natural person’ (usually companies) in excess of £500,000 subject to certain exclusions.


 

Individual Savings Account

Overall investment limit £20,000
Junior ISA limit £9,000
Lifetime ISA limit - counts towards the annual overall investment limit £4,000

Tax relief on investments

Enterprise Investment Scheme (EIS)
Relief on investments in unquoted trading companies up to £2,000,000 pa.
• Income tax relief at 30%
• Capital gains exemption on disposal
Unlimited amounts of capital gains from the disposal of other assets may be able to be deferred by making an EIS investment.

Seed Enterprise Investment Scheme (SEIS)
Relief on investments in certain unquoted trading companies up to £100,000 pa.
• Income tax relief at 50%
• Capital gains exemption on disposal
Capital gains from the disposal of other assets may be exempt up to £50,000 p.a. by making a SEIS investment.

Venture Capital Trusts (VCT)
Relief on investments in certain quoted companies up to £200,000 pa.
• Income tax relief at 30%
• Capital gains exemption on disposal
Dividends received from VCTs may be exempt from income tax.


 

Pension Allowances

Lifetime Allowance limit ^1

£1,073,100

Annual Allowance limit ^2

£40,000

Money Purchase Annual Allowance ^3

£4,000

 

1 Lifetime Allowance is set to increase each year with inflation.
2 The Annual Allowance is tapered by £1 for every £2 of adjusted income in excess of £200,000 subject to a minimum of £4,000. If relief is not used in a year it may be carried forward up to 3 years provided the individual was a member of a registered scheme in the year to which the unused relief relates.
3 The Money Purchase Annual allowance relates to those individuals who have already started to draw pension benefits. There is no ability to carry forward unused allowances from the previous 3 years.


Statutory Pay Rates

 

 

Weekly benefits

Basic State Pension 

single person 

£134.25

married couple 

£214.75

New State Pension  

£175.20

Statutory Sick Pay ^1 standard rate £95.85 ^2

Statutory Maternity Pay

Adoption Pay

first six weeks 90% of weekly earnings
next 33 weeks £151.20 ^3
Statutory Paternity Pay two weeks £151.20 ^3

1 Paid for up to 28 weeks but excluding the first 3 days.
2 Based on the number of Qualifying Days which apply for the week.
3 Or 90% of weekly earnings if lower.


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