Budget 2020: tax rates and allowances
The following table shows the latest tax rates and allowances for the year 2020
| 2019/20 | 2020/21 | |||
|---|---|---|---|---|
| Income tax rates: England and Wales (non-dividend income) | £ | £ | ||
| 20% basic rate tax | 12,501-50,000 | 12,501-50,000 | ||
| 40% higher rate tax | 50,001-150,000 | 50,001-150,000 | ||
| 45% additional rate tax | Above 150,000 | Above 150,000 | ||
| Scottish rates of income tax (non-dividend income) | ||||
| 19% starting rate | 12,501-14,549 | 12,501-14,585 | ||
| 20% basic rate tax | 14,550-24,944 | 14,586-25,158 | ||
| 21% intermediate rate tax | 24,945-43,430 | 25,159-43,430 | ||
| 41% higher rate tax | 43,431-150,000 | 43,431-150,000 | ||
| 46% top rate | Above 150,000 | Above 150,000 | ||
| Income tax rates (dividend income) | ||||
| Dividend allowance | £2,000 | £2,000 | ||
| Dividend ordinary rate (for dividends within basic rate band) | 7.50% | 7.50% | ||
| Dividend upper rate (for dividends within higher rate band) | 32.50% | 32.50% | ||
| Dividend additional rate (for dividends above higher rate band) | 38.10% | 38.10% | ||
| Personal allowances | ||||
| Personal allowance | 12,500 | 12,500 | ||
| Dividend allowance | 2,000 | 2,000 | ||
| Personal savings allowance for basic rate taxpayers | 1,000 | 1,000 | ||
| Personal savings allowance for higher rate taxpayers | 500 | 500 | ||
| Personal savings allowance for additional rate taxpayers | 0 | 0 | ||
| Rent-a-room relief | 7,500 | 7,500 | ||
| Transferable tax allowance for married couples/civil partners | 1,250 | 1,250 | ||
| Micro entrepreneur’s allowance: For individuals making property or trading incomes | 1,000 each | 1,000 each | ||
| National insurance | 2019/20 | 2020/21 | ||
| Lower earnings limit, primary class 1 (per week) | £118 | £120 | ||
| Upper earnings limit, primary class 1 (per week) | £962 | £962 | ||
| Primary threshold (per week) | £166 | £183 | ||
| Secondary threshold (per week) | £166 | £169 | ||
| Employment allowance (per year/employer) | £3,000 | £4,000 | ||
| Employee’s primary class 1 rate between primary threshold and upper earnings limit | 12% | 12% | ||
| Employee’s primary class 1 rate above upper earnings limit | 2% | 2% | ||
| Employer’s secondary class 1 rate above secondary threshold | 13.80% | 13.80% | ||
| Class 2 rate (per week where profits are above small profits threshold) |
3.00% |
3.05% | ||
| Class 2 small profits threshold (per year) | £6,365 | £6,475 | ||
| Special class 2 rate for share fishermen (per week) | 3.65% | 3.70% | ||
| Special class 2 rate for volunteer development workers | 5.90% | 6.00% | ||
| Class 3 voluntary rate (per week) | 15.00% | 15.30% | ||
| Class 4 lower profits limit | 8,632 | 9,500 | ||
| Class 4 upper profits limit | £50,000 | £50,000 | ||
| Class 4 rate between lower profits limit and upper profits limit | 9.00% | 9.00% | ||
| Class 4 rate above upper profits limit | 2.00% | 2.00% | ||
| Pensions | ||||
| Annual allowance | 40,000 | 40,000 | ||
| Lifetime allowance | 1,055,000 | 1,073,100 | ||
| Money purchase annual allowance | 4,000 | 4,000 | ||
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| Reliefs and incentives | £ | £ | ||
| Enterprise Investment Scheme (EIS) – maximum | £1,000,000 | £1,000,000 | ||
| Venture Capital Trust (VCT) – maximum | £200,000 | £200,000 | ||
| Enterprise Management Incentive Scheme (EMI) – employee limit up to the value of £250,000 in a three-year period | £250,000 | £250,000 | ||
| Seed Enterprise Investment Scheme (SEIS) – maximum | £100,000 | £100,000 | ||
| Social Investment Tax Relief (SITR) – maximum | £1,000,000 | £1,000,000 | ||
| Income tax relief on EIS and VCT schemes | 30% | 30% | ||
| Income tax relief on SEIS schemes | 50% | 50% | ||
| Income tax relief on SITR schemes | 30% | 30% | ||
| Individual Savings Account (ISA): | ||||
| ISA (NISA) annual limit | 20,000 | 20,000 | ||
| Junior ISA investment annual limit – under 18, living in the UK | 4,368 | 9,000 | ||
| Child Trust Fund annual limit | 4,368 | 9,000 | ||
| Lifetime ISA annual limit | 4,000 | 4,000 | ||
| Capital gains tax | ||||
| Rate – basic rate taxpayer | 10% | 10% | ||
| – higher rate taxpayer | 20% | 20% | ||
| Gain on sale of residential property – basic rate taxpayer | 18% | 18% | ||
| – higher rate taxpayer | 28% | 28% | ||
| Annual exemptions – individuals (per year) | £12,000 | £12,300 | ||
| Certain trusts for disabled persons (per year) | £12,000 | £12,300 | ||
| Other trusts (per year) | £6,000 | £6,150 | ||
| Entrepreneurs’ Relief lifetime limit | £10,000,000 | £1,000,000 | ||
| Investors’ Relief lifetime limit | £10,000,000 | £10,000,000 | ||
| Entrepreneurs’/Investors’ rate | 10% | 10% | ||
| Chattels exemption | £6,000 | £6,000 | ||
| Inheritance tax | ||||
| Single person’s nil-rate band | £1-£325,000 | £1-£325,000 | ||
| Single person’s 40% band | over £325,000 | over £325,000 | ||
| Residence nil-rate band (RNRB) – maximum | £150,000 | £175,000 | ||
| Reduced rate | 36% | 36% | ||
| IHT rate (for chargeable lifetime transfers) | 20% | 20% | ||
| Married couples or civil partnerships allowance nil-rate band | £650,000 | £650,000 | ||
| Gifts to charities | Exempt | Exempt | ||
| Small gifts to same person | £250 | £250 | ||
| General gifts – annual exemption | £3,000 | £3,000 | ||
| Wedding gifts from parent | £5,000 | £5,000 | ||
| Wedding gifts from grandparent/party | £2,500 | £2,500 | ||
| Wedding gifts from any other person | £1,000 | £1,000 | ||
| Business Property Relief Business or interest in a business and transfer if unquoted shareholdings | 100% | 100% | ||
| Corporation tax | ||||
| All profits and gains (excluding determination agreements and diverted profits | 19% | 19% | ||
| S455 tax on all loans made by close companies to participator | 32.50% | 32.50% | ||
| Capital allowances | ||||
| Main writing-down allowance (reducing balance) | 18% | 18% | ||
| Special rate writing-down allowance (reducing balance) | 6% | 6% | ||
| Structures and buildings allowance (SBA) | 2% | 3% | ||
| Motor cars if CO2 > 50g/km but does not exceed 110g/km | 18% | 18% | ||
| Motor cars if CO2 > 110g/km | 6% | 6% | ||
| FYA New and unused motor cars if CO2 emissions less than 50 g/km (or car is electric) and certain energy-saving/water-efficient products | 100% | 100% | ||
| Small pool write-off where WDV is £1,000 or less Annual Investment Allowance |
100% | 100% | ||
| Annual investment allowance (AIA) | £1,000,000 | £1,000,000 | ||
| Research and development tax credit rates | ||||
| SME rate | 230% | 230% | ||
| Research and development SME payable credit | 14.5% | 14.5% | ||
| Research and development expenditure credit (RDEC) scheme | 12% | 13% | ||
| Film/High-end TV/videogames tax credit | 25% | 25% | ||
| Open-ended investment companies and authorised unit trusts | 20% | 20% | ||
| Patent box | ||||
| Patent box | 10% | 10% | ||
| VAT | ||||
| Standard rate | 20% | 20% | ||
| Reduced rate | 5% | 5% | ||
| Zero rate | 0% | 0% | ||
| Flat rate of VAT on gross turnover (for limited cost trader) | 16.5% | 16.5% | ||
| Normal scheme registration threshold | £85,000 | £85,000 | ||
| Deregistration threshold | £83,000 | £83,000 | ||
| Cash accounting scheme – maximum to join | £1,350,000 | £1,350,000 | ||
| Cash accounting scheme – exit threshold | £1,600,000 | £1,600,000 | ||
| Annual accounting scheme – maximum to join | £1,350,000 | £1,350,000 | ||
| Annual accounting scheme – exit threshold | £1,600,000 | £1,600,000 | ||
| Flat-rate scheme – maximum allowed to join | £150,000 | £150,000 | ||
| Flat-rate scheme exit threshold | £230,000 | £230,000 | ||
March 2020 onward
LEGAL NOTICE
This is a basic guide prepared by ACCA UK‘s Technical Advisory Service for members and their clients. It should not be used as a definitive guide, since individual circumstances may vary. Specific advice should be obtained, where necessary. For more information contact Harris Accountancy Services Ltd on 01214558055 or email [email protected]
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