Tax card - Ashby & Co

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 – £732 – £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%

Rate for gains above the basic rate band

20%

Gains on residential property (that do not qualify for private residence relief) within the basic rate band

18%

Gains on residential property (that do not qualify for private residence relief) above the basic rate band

28%

Rate for gains subject to entrepreneurs’ relief

10%

Lifetime limit for gains subject to entrepreneurs’ relief (effective from 11 March 2020)

£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