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North Bank, 14 Bishearne Gardens Liss, Hampshire, GU33 7SB. 01730 894 419
steve@ashbyandco.com - 07853 124 275 : john@ashbyandco.com - 07765 227 891

Tax card

Income Tax

 

Income Tax Rates
2019-2020
%
2018-2019
%
2020-2021
%
Starting rate for savings
0
0
0
Basic tax rate
20
20
20
Higher tax rate
40
40
40
Additional tax rate
45
45
45
Allowance for tax-free dividends
£2,000
£2,000
£2,000
Tax on dividends at Basic Effective Rate
7.5
7.5
7.5
Tax on dividends at Higher Effective Rate
32.5
32.5
32.5
Tax on dividends at Additional Effective Rate
38.1
38.1
38.1
Starting rate band for savings
£0 –
£5,000
£0 –
£5,000
£0 –
£5,000
Basic rate band 20%
£0 –
£37,500
£0 –
£34,500
£0 –
£37,500
Higher rate band 40%
£37,501 to £150,000
£34,501 to £150,000
£37,500 to £150,000
Additional rate band 45%
Over £150,001
Over £150,001
Over £150,001

When the personal allowance is taken into account an individual will start to pay tax at 40% when their total income exceeds £50,000 in 2020/21.

This threshold (and the 45% threshold) can be increased if the taxpayer pays personal pension contributions or makes gift aid donations.

Personal Allowances

Personal
allowances
2019-2020
2018-2019
2020-2021
Standard payroll tax code
1250L
1185L
1250L
Personal allowance
£12,500
£11,850
£12,500
Income limit for Personal Allowance (1)
£100,000
£100,000
£100,000
PA not applicable if income exceeds
£125,000
£123,700
£125,000
Max Married Couples Allowance
£8,915
£8,695
£9,075
Min Married Couples Allowance
£3,450
£3,360
£3,510
Income limit for Married Couples Allowance
£29,900
£28,900
£30,200
Transferable Marriage Allowance (2)
£1,250
£1,190
£1,250
Blind person’s allowance
£2,450
£2,390
£2,500
Dividend allowance (3)
£2,000
£2,000
£2,000
Personal Savings Allowance (Basic Rate Taxpayer)
£1,000
£1,000
£1,000
Personal Savings Allowance (Higher Rat Taxpayer)
£500
£500
£500
Individual Saving Account (ISA) – Overall annual limit
£20,00
£20,000
£20,000
Individual Saving Account (ISA) – Junior account limit
£4,368
£4,420
£9,000
Personal Annual Pension Allowance 100% of salary up to:
£40,000
£40,000
£40,000
Permitted pension contributions (irrespective of salary)
£3,600
£3,600
£3,600
Note 1: Where income is above £100,000 the Personal Allowance reduces by £1 for every £2 of income above the £100,000 limit. It can go down to zero. This reduction applies to all people irrespective of age or date of birth.
Note 2: If your husband, wife or civil partner has income less than the personal allowance they can transfer £1,250 of their personal allowance to you. This can reduce your tax bill by up to £250.

National Insurance Contributions

 

National Insurance
Class 1
2019-2020
£
2018-2019
£
2020-2021
£
Class 1
Men over 65, Women
over 60, and children under 16 do not pay Class 1
contributions.
Employee’s Earnings Limits
Weekly – Monthly – Yearly
Weekly – Monthly – Yearly
Weekly – Monthly – Yearly
– Lower earnings limit (LEL)
The minimum level of earnings employees
need to qualify for benefit including State Pension.
£118 – £512 – £6,136
£116 – £503 – £6,032
£120 – £520 – £6,240
– Primary threshold (PT)
The level of earnings above which
employees Class 1 contributions become payable.
£166 – £719 – £8,632
£162 – £702 – £8,424
£183 – £792 – £9,516
– Secondary threshold (ST)
The level of earnings above which
employers Class 1 contributions become payable.
£166 – £719 – £8,632
£162 – £702 – £8,424
£169 – £532 – £8,788
– Upper earnings limit (UEL)
All employees pay a lower rate of National Insurance above this point.
£962 – £4,167 – £50,024
£892 – £3,863 – £46,350
£962 – £4,167 – £50,024
Employer’s
Allowance
£3,000
£3,000
£4,000
Employee’s
Class 1 NI rates
– Primary rate from PT to UEL
12%
12%
12%
– Above UEL
2%
2%
2%
Employer’s
Class 1 NI rates
– Primary rate above ST
13.8%
13.8%
13.8%
Employer’s Class 1A NI rates on Benefits In Kind
13.8%
13.8%
13.8%
Self employed class 2 per week
£3
£2.95
£3.05
Class 3 per week
£15
£14.65
£15.30
Self employed class 4 annual profit threshold
£8,632 – £50,000
£8,424 – £46,350
£9,501 – £50,000
Rate
9%
9%
9%
Self employed class 4 additional rate
Over £50,000
Over £46,350
Over £50,000
Rate
2%
2%
2%

Corporation Tax

Corporation Tax
2019-2020
£
2018-2019
£
2020-2021
£
Main rate:
19%
19%
19%
Loans to participators
32.5%
32.5%
32.5%

RESEARCH AND DEVELOPMENT (R&D)
Small and medium (SME) companies can claim enhanced deductions for expenditure on R&D projects at 230% of qualifying expenditure. Where the deduction is claimed and the company makes a loss, it can claim a cash credit from HMRC of 14.5% of that loss.

Capital Gains Tax

Capital
Gains Tax
2019-2020
£
2018-2019
£
2020-2021
£
Annual exemption
£12,000
£11,700
£12,300
Annual exemption for most trustees and personal representatives
£6,000
£5,850
£6,100
Rate for gains within the basic rate band
10%
10%
10%
Rate for gains above the basic rate band
20%
20%
20%
Gains on residential property (that do not qualify for private residence relief) within the basic rate band
18%
18%
18%
Gains on residential property (that do not qualify for private residence relief) above the basic rate band
28%
28%
28%
Rate for gains subject to entrepreneurs’ relief
10%
10%
10%
Lifetime limit for gains subject to entrepreneurs’ relief (effective from 11 March 2020)
£10,000,000
£10,000,000
£1,000,000
Proceeds per item, or set, for chattels
£6,000

Compulsory registration for VAT

  From
1 April 2020
  Standard rate
20%*
  Standard rate VAT fraction
1/6
  Reduced rate
5%
  Reduced rate VAT fraction
1/21
  Zero rate
0%
  Registration – last 12 months or next 30 days over
£85,000
  Deregistration – next 12 months under
£83,000
  Cash accounting scheme – up to
£1.35m
  Optional flat rate scheme
  joining up to
£150,000
  exiting over
£230,000
  Annual accounting scheme – up to
£1.35m
  Intrastat arrivals threshold
£1.5m
  Intrastat dispatches threshold
£250,000
  EC sales list reporting threshold nil

* From 15 July 2020 to 12 January 2021, the standard rate of VAT of 20% will be cut to 5% on supplies of food and non-alcoholic drinks from pubs, restaurants, cafes, and similar premises, as well as supplies of accommodation and admission to attractions across the UK.

VAT flat-rate scheme

A business must leave the scheme when turnover increases to more than £230,000. However, a business can remain in the scheme with HMRC’s written agreement provided it can be shown that total sales in the following 12 months will be less than £191,500 including VAT.

The Authorised Mileage Rates

 

Mileage
Rates to be used for privately owned vehicles from 6th April 2011
First 10,000 business miles in the tax year
Each mile over 10,000 miles in the tax year
Extra passenger making same trip20p
  Cars and vans
45p
25p
5p
  Motorcycles
24p
24p
  Bicycles
20p
20p

Stamp Duty

Stamp duty land tax (SDLT) on residential property is charged at different rates depending on the portion of the purchase price that falls within a certain rate band.

Rates are applied only to the portion of the property’s value that exceeds the relevant band threshold.

On 8 July 2020, the chancellor raised the lower threshold at which stamp duty land tax is paid from £125,000 to £500,000.

Most property purchases in England and Northern Ireland below £500,000 will not need to pay stamp duty land tax as long as the deal is completed before 31 March 2021.

Stamp Duty
Residential* 8 July 2020 – 31 March 2021
Residential* 6 April 2020 – 7 July 2020
Non-residential**
Band
Rate
Band
Rate
Band
Rate
£0 – £500,000
0%
£0 – £125,000
0%
£0 – £150,000
0%
£500,001 – £925,000
5%
£125,001 – £250,000
2%
£150,001 – £250,000
2%
£925,001 – £1,500,000
10%
£250,000 – £925,000
5%
Over £250,000
5%
£1,500,001 and over
12%
£925,001 – £1,500,000
10%
£150,001 and over
12%

* Residential: Payable on consideration which falls in each bracket.
** Non-residential:Payable on total consideration once limit is breached.

First-time-buyers
Stamp duty land tax has been abolished for first-time-buyers who buy homes under £300,000. First-time-buyers who purchase a home worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000. They will pay 5% on the price above £300,000 up to £500,000 and the normal rates thereafter.

From 8 July 2020 to 31 March 2021, first-time buyers pay no SDLT on the first £500,000.

Higher rates for additional properties
You’ll usually have to pay 3% on top of the normal SDLT rates if buying a new residential property means you’ll own more than one.

If you’re replacing your main residence
You will not pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.

If there’s a delay selling your main residence and it has not been sold on the day you complete your new purchase:
·         you’ll have to pay higher rates because you own 2 properties
·         you may be able to get a refund if you sell your previous main home within 36 months

From 8 July 2020 to 31 March 20221, someone who wishes to buy a second home will not pay stamp duty land tax up to £500,000, but would still be liable to pay the 3% surcharge on the whole purchase price.

Inheritance Tax

Inheritance
Tax
2020-21
£
2019-20
£
Standard exemption
£325,000
£325,000
Married couples / civil partners exemption
£1m
£950,000
Residential nil-rate band (family home allowance)*
£175,000
£150,000
Taxed above £325,000 at:
40%
40%
Lifetime transfers to most trusts:
20%
20%
* The additional residential nil-rate band is only available if the former home is left to children, grandchildren or more remote direct descendants.
Main exempt lifetime gifts
Small gifts (per recipient):
£250
£250
Parent’s gift on marriage:
£5,000
£5,000
Grandparent’s gift on marriage:
£2,500
£2,500
Gifts (per donor):
£3,000
£3,000

Each individual has a tax-free gift allowance of £3,000 per annum. This means that a donor can give £3,000 in any one tax year without tax implications. Anything larger than £3,000 will be considered a ‘Potentially Exempt Transfer’ (PET) and may be subject to inheritance tax should the donor fail to survive seven years from the date the gift is made.

Most transfers between spouses and civil partners are exempt.

Gifts to charities (during lifetime or on death) and qualifying political parties are exempt.

The main 40% IHT rate is reduced to 36% if at least 10% of relevant estate is left to charity.

It is possible to transfer unused nil-rate band allowances between spouses or civil partners. A claim may be made to utilise any unused nil rate band from the deceased spouse or civil partner’s estate. It is also possible to carry over the unused residence nil-rate band.

The amount of the nil rate-band potentially available for transfer will be based on the proportion of the nil-rate band unused when the first spouse or civil partner died. If on the first death the chargeable estate is £162,500 and the nil-rate band is £325,000, then 50% of the original nil-rate band is unused. If the nil rate band when the surviving spouse dies is £400,000, then that would be increased by 50% to £600,000.

All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purpose of calculating the tax payable. This may then be reduced by taper relief.

Charge on gifts within 7 years of death

Years before death
0-3
3-4
4-5
5-6
6-7
Tax reduced by
0%
20%
40%
60%
80%

Main reliefs

Normal expenditure out of income
Exempt
Business property:
Business or interest therein
100%
Qualifying shareholders in unquoted* companies
100%
Land, buildings, machinery, or plant used
by transferor’s controlled company or partnership
50%
Agricultural property
50% or 100%
*Unquoted companies include those listed on AIM and ISDX