Income Tax Rates and Allowances
Income Tax Rates and Allowances (Table A)
| Main allowances | 2020/21 | 2019/20 |
|---|---|---|
| Personal Allowance (PA)*† | £12,500 | £12,500 |
| Blind Person's Allowance | 2,500 | 2,450 |
| Rent a room relief § | 7,500 | 7,500 |
| Trading income § | 1,000 | 1,000 |
| Property income § | 1,000 | 1,000 |
*PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.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 £125,000 or more.
†£1,250 of the PA can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer, where both spouses were born after 5 April 1935.
§ If gross income exceeds it, the limit may be deducted instead of actual expenses.
| Rate Bands | 2020/21 | 2019/20 |
|---|---|---|
| Basic Rate Band (BRB) | £37,500 | £37,500 |
| Higher Rate Band (HRB) | 37,501-150,000 | 37,501-150,000 |
| Additional rate | over 150,000 | over 150,000 |
| Personal Savings Allowance (PSA) | ||
| – Basic rate taxpayer | 1,000 | 1,000 |
| – Higher rate taxpayer | 500 | 500 |
| Dividend Allowance (DA) | 2,000 | 2,000 |
BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.
| Tax Rates | 2020/21 and 2019/20 | ||
|---|---|---|---|
| Rates differ for General, Savings and Dividend income within each band: | |||
| G | S | D | |
| Basic | 20% | 20% | 7.5% |
| Higher | 40% | 40% | 32.5% |
| Additional | 45% | 45% | 38.1% |
General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). 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 will tax 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.
High Income Child Benefit Charge (HICBC)
1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.
| Income Tax – Scotland 2019/20 | Rate | 2020/21 | 2019/20 |
|---|---|---|---|
| Starter Rate | 19% | £1 – £2,085 | £1 – £2,049 |
| Basic Rate | 20% | 2,086 – 12,658 | 2,050 – 12,444 |
| Intermediate Rate | 21% | 12,659 – 30,930 | 12,445 – 30,930 |
| Higher Rate | 41% | 30,931 – 150,000 | 30,931 – 150,000 |
| Top Rate | 46% | over 150,000 | over 150,000 |
The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.
| Remittance basis charge | 2020/21 | 2019/20 |
|---|---|---|
| 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 years | 60,000 | 60,000 |
| 15 of the preceding 20 tax years | Deemed to be UK domiciled for tax purposes | |
Registered Pensions (Table B)
| 2020/21 | 2019/20 | |
|---|---|---|
| Lifetime allowance (LA) | £1,073,100 | £1,055,000 |
| Annual allowance (AA) | 40,000 | 40,000 |
Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.
The AA is usually reduced by £1 for every £2 by which relevant income exceeds £240,000 (2019/20: £150,000), down to a minimum AA of £4,000 (2019/20: £10,000)
The AA can also be reduced to £4,000, where certain pension drawings have been made.
Car and Fuel Benefits (Table C)
Cars
Taxable benefit: List price multiplied by chargeable percentage.
| 2020/21 percentage for petrol cars first registered | |||
| CO2 emissions g/km |
Electric range Miles |
Pre 06.04.2020 % |
Post 05.04.2020 % |
|---|---|---|---|
| 0 | N/A | 0 | 0 |
| 1-50 | >130 | 2 | 0 |
| 1-50 | 70 - 129 | 5 | 3 |
| 1-50 | 40 - 69 | 8 | 6 |
| 1-50 | 30 - 39 | 12 | 10 |
| 1-50 | <30 | 14 | 12 |
| 51-54 | N/A | 15 | 13 |
Then a further 1% for each 5g/km CO2 emissions, up to a maximum of 37%. Diesel cars that are not RDE2 standard suffer a 4% supplement on the above figures but are still capped at 37%.
Car Fuel
Where employer provides fuel for private motoring in an employer-owned car, CO2-based percentage from above table multiplied by £24,500 (2019/20 £24,100).