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 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 |
Residential* |
| * Additional 8% may apply to the disposal of certain residential property and carried interest. | ||
| Land & Building Transaction Tax | ||
|
Scotland
|
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 |
Rate 0% |
Residential* £0 - £180,000 |
* 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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