Tax Rates 2019/20

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Income Tax rates and Personal Allowances

Income Tax
Allowances2019/202018/19
Personal Allowance (PA)*£12,500£11,850
Marriage Allowance†1,2501,190
Blind Person’s Allowance2,4502,390
Rent a room relief**7,5007,500
Trading income**1,0001,000
Property income**1,0001,000

* PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £123,700 or more (2018/19: £123,700).

† The part of the PA that is transferable to a spouse or civil partner who is not a higher or top rate taxpayer.

** If gross income exceeds it, the limit may be deducted instead of actual expenses.

Rate bands2019/202018/19
Basic rate band (BRB)£37,500£34,500
Higher Rate Band (HRB)37,501 – 150,00034,501 – 150,000
Additional rateover 150,000over 150,000
Personal Savings Allowance (PSA)
– Basic rate taxpayer1,0001,000
– Higher rate taxpayer500500
Dividend Allowance (DA)2,0002,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax rates2019/20 and 2018/19
Rates differ for General, Savings and Dividend incomeGSD
Basic rate20%20%7.5%
Higher rate40%40%32.5%
Additional rate45%45%38.1%

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). Scottish taxpayers are taxed at different rates on general income (see below).

To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 of dividend income at nil, rather than the rate that would otherwise apply.

Income tax – Scotland 2018/19*BandRate
Starter Rate£2,00019%
Basic Rate2,001 – 12,15020%
Intermediate Rate12,151 – 31,58021%
Higher Rate31,581 – 150,00041%
Top Rateover 150,00046%

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.

*The 2019/20 tax rates and bands for Scottish Taxpayers have not yet been announced.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge2019/202018/19
For non-UK domiciled individuals who have been
UK resident in at least:
7 of the preceding 9 tax years£30,000£30,000
12 of the preceding 14 tax years60,00060,000
15 of the preceding 20 tax yearsDeemed to be UK domiciled

Pensions
Registered Pensions2019/202018/19
Lifetime allowance (LA)£1,055,000£1,030,000
Annual allowance (AA)*40,00040,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

*Usually tapered (down to a minimum of £10,000) when adjusted income exceeds £150,000.

State pension (per week)2019/202018/19
Old state pension – Single person£129.20£125.95
Old state pension – Married couple206.65201.45
New state pension†168.60164.35

†applies to those reaching state retirement age after 5 April 2016.

Annual investment limits
2019/202018/19
Individual Savings Account (ISA)
– Overall limit£20,000£20,000
– Lifetime ISA4,0004,000
Junior ISA4,3684,260
EIS* – 30% relief2,000,0002,000,000
EIS eligible for CGT deferral reliefUnlimitedUnlimited
Seed EIS (SEIS) – 50% relief100,000100,000
SEIS – 50% exemption for reinvested gains100,000100,000
Venture Capital Trust (VCT) – 30% relief200,000200,000

*Amount over £1m must be invested in ‘knowledge-intensive’ companies.

National Insurance Contributions

Class 1 (Employees)

EmployeeEmployer
Main NIC rate12.0%13.8%
No NIC on first£166pw£166pw
Main rate* charged up to£962pwno limit
2% rate on earnings above£962pwN/A
Employment allowance per business**N/A£3,000

*Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £962pw.

**Some businesses do not qualify, including certain sole director companies.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

Class 2 (Self-employed)

Flat rate per week£3
Small profits threshold£6,365

Class 3 (Voluntary)

Flat rate per week£15

Class 4 (Self-employed)

On profits £8,632 – £50,0009.0%
On profits over £50,0002.0%

Vehicle Benefits

Cars

Taxable benefit: Chargeable value multiplied by chargeable %.

Chargeable value:

Initial list price of car (including most accessories), reduced by any capital contribution (maximum £5,000) by employee when the car is first made available.

Chargeable percentage:

CO2 emissions g/km*PetrolDiesel
0-5016%20%
51-7519%23%
76-9422%26%
Above 94Add 1% for every 5g/km
Above 164 (petrol)/ 144 (diesel)37% maximum

*The percentages for petrol cars apply to diesel cars that meet the RDE2 standard.

Vans

Chargeable value of £3,430 (2018/19 £3,350) if private use is more than home-to-work. Electric vans £2,058 (2017/18 £1,340).

Fuel

Employer provides fuel for private motoring in an employer-owned:

Car: CO2-based percentage from above table multiplied by £24,100 (2018/19 £23,400).

Van: £655 (2018/19 £633).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).

Tax-free mileage allowances
Employee’s own transportper business mile
Cars first 10,000 miles45p
Cars over 10,000 miles25p
Business passengers5p
Motorcycles24p
Bicycles20p
Capital Gains Tax
2019/202018/19
Annual exemption
Individuals, estates£12,000£11,700
Most trusts6,0005,850
Tax rate
Individual (to basic rate limit)*10%10%
Individual (above basic rate limit)*20%20%
Trusts, estates*20%20%
Entrepreneurs’ Relief (ER)**10%10%
Investors’ Relief (IR)***10%N/A

*Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts and estates are taxed at 28% in these circumstances.

**ER is available for lifetime gains of up to £10m. Qualifying disposals include a trading business and shares in a trading company (from a minimum 5% holding) by an officer/employee. Various conditions apply.

***Shares in an unquoted trading company may qualify for IR on lifetime gains up to £10m, if disposed of after 5 April 2019 by someone who is not a paid officer of the company. Various conditions apply.

Corporation Tax
Year to31.3.2020
Corporation Tax rate19%

 

Research and development reliefFrom 1.1.2018
SME enhanced expenditure
deduction scheme*
130%
Large company R&D Expenditure
Credit (RDEC) scheme**
12%

*Additional deduction for qualifying R&D

**Taxable expenditure credit for qualifying R&D

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss.

Main capital allowances
Plant and machinery allowancesRate
Annual Investment Allowance (AIA)
– expenditure 1.1.19 – 31.12.20£1,000,000100%
– expenditure pre 1.1.19200,000100%
Energy/water-efficient equipment100%
Writing down allowance: general pool (reducing balance)18%
Writing down allowance: special rate pool (reducing balance)*6%

 

Motor cars purchased
From 1.4.18
CO2 (g/km)
1.4.15 to 31.3.18
CO2 (g/km)
Allowance
New cars onlyup to 50up to 75100%
In general poolup to 110up to 13018% pa
In special rate pool*above 110above 1306% pa

*8% pre 1.4.19 (companies) and pre 6.4.19 (businesses subject to income tax).

Structures and buildings allowance
Expenditure from 29.10.18 (straight line basis)2%
Property Taxes

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to ‘high value’ residential properties owned via a corporate structure, unless the property is used for a qualifying purpose. The tax applies to properties valued at more than £500,000.

Property valueAnnual charge to
31.3.202031.3.2019
£0.5m – £1m£3,650£3,600
£1m – £2m7,4007,250
£2m – £5m24,80024,250
£5m – £10m57,90056,550
£10m – £20m116,100113,400
Over £20m232,350226,950

Stamp Duty Land Tax (SDLT), Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT)

Residential property (1st property only)
SDLT – England & NI
£000
Rate on bandLBTT – Scotland
£000
Rate on bandLTT – Wales
£000
Rate on band
Up to 125NilUp to 145NilUp to 180Nil
125 – 2502%145 – 2502%180 – 2503.5%
250 – 9255%250– 3255%250 – 4005.0%
925 – 1,50010%325 – 75010%400 – 7507.5%
Over 1,50012%Over 75012%750 – 1,50010.0%
Over 1,50012.0%

A supplement of 3% of the total purchase price applies for all three taxes where an additional residential property is purchased for more than £40,000 (unless replacing a main residence). It is also payable by all corporate purchasers.

For SDLT:

– First-time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of purchase price.

– A rate of 15% may apply to the total purchase price, where the property is valued above £500,000 and purchased by a ‘non-natural person’ (e.g. a company).

Non-residential or mixed use property
SDLT – England & NI
£000
Rate on bandLBTT – Scotland
£000
Rate on bandLTT – Wales
£000
Rate on band
Up to 150NilUp to 150NilUp to 150Nil
150 – 2502%150 – 3503.0%150 – 2501%
Over 2505%Over 3504.5%250 – 1,0005%
Over 1,0006%
Value Added Tax
Standard rate (1/6 of VAT-inclusive price)20%
Registration level from 1.4.2017£85,000 per annum
Deregistration level from 1.4.201783,000 per annum

From 1.4.2019 most businesses above the registration threshold must comply with the Making Tax Digital requirements.

Flat rate scheme (FRS)

Annual taxable turnover to enter schemeUp to £150,000
Must leave scheme if annual taxable turnoverExceeds £230,000

If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of “FRS turnover” rather than the net of output tax over input tax. Input tax is usually not recoverable.

Cash accounting and Annual accounting schemes

Annual taxable turnover to enter schemeUp to £1.35m
Must leave scheme if annual taxable turnoverExceeds £1.60m

Option to tax property

Notify HMRC within 30 days.

Inheritance Tax
2019/202018/19
Nil rate band (NRB)*£325,000£325,000
NRB Residential enhancement (RNRB)†*150,000125,000
Rate of tax above nil rate band**40%40%
Lifetime transfers to most trusts20%20%

†RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.

*Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

**Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.

100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death0-33-44-55-66-7
% of full death tax charge payable10080604020

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.

Key dates and deadlines
Payment dates
Self assessment2019/202018/19
1st payment on account31 January20202019
2nd payment on account31 July20202019
Balancing payment31 January20212020
Capital Gains Tax*31 January20212020

*Non-residents with gains on UK residential property must pay CGT within 30 days of disposal unless already filing a self assessment tax return.

Other payment dates
Class 1A NIC19 July20202019
Class 1B NIC19 October20202019

Corporation tax is due 9 months and 1 day from the end of the accounting period, unless a ‘large’ company paying by quarterly instalments.

2018/19 Filing deadlines
Issue P60s to employees31 May 2019
P11D, P11D(b)6 July 2019
Self assessment tax return (SATR) paper version31 October 2019
Online SATR if outstanding tax
to be included in 2020/21 PAYE code
30 December 2019
Online SATR31 January 2020
Useful rates
National Minimum Wage
Rates per hour
From 1.04.19From 1.04.18
Aged 25 and over (National Living Wage)£8.21£7.83
Aged 21 – 247.707.38
Aged 18 – 206.155.90
Aged 16 – 174.354.20
Apprentices3.903.70
Child Benefit (per week)2019/202018/19
First eligible child£20.70£20.70
Each subsequent child13.7013.70

You are advised to consult us before acting on any information contained herein.

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