Welcome to the 2019-20 Tax Rates


Income Tax

Allowances 2019/20 2018/19
Personal Allowance (PA)* £12,500 £11,850
Marriage Allowance† 1,250 1,190
Blind Person’s Allowance 2,450 2,390
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* PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.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 £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 bands 2019/20 2018/19
Basic rate band (BRB) £37,500 £34,500
Higher Rate Band (HRB) 37,501 – 150,000 34,501 – 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 2019/20 and 2018/19
Rates differ for General, Savings and Dividend income G S D
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 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). 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* Band Rate
Starter Rate £2,000 19%
Basic Rate 2,001 – 12,150 20%
Intermediate Rate 12,151 – 31,580 21%
Higher Rate 31,581 – 150,000 41%
Top Rate over 150,000 46%

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 charge 2019/20 2018/19
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 years 60,000 60,000
15 of the preceding 20 tax years Deemed to be UK domiciled
back to top

Pensions

Registered Pensions 2019/20 2018/19
Lifetime allowance (LA) £1,055,000 £1,030,000
Annual allowance (AA)* 40,000 40,000

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) 2019/20 2018/19
Old state pension – Single person £129.20 £125.95
Old state pension – Married couple 206.65 201.45
New state pension† 168.60 164.35

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

back to top

Annual investment limits

2019/20 2018/19
Individual Savings Account (ISA)
– Overall limit £20,000 £20,000
– Lifetime ISA 4,000 4,000
Junior ISA 4,368 4,260
EIS* – 30% relief 2,000,000 2,000,000
EIS eligible for CGT deferral relief Unlimited Unlimited
Seed EIS (SEIS) – 50% relief 100,000 100,000
SEIS – 50% exemption for reinvested gains 100,000 100,000
Venture Capital Trust (VCT) – 30% relief 200,000 200,000

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

back to top

National Insurance Contributions

Class 1 (Employees)

Employee Employer
Main NIC rate 12.0% 13.8%
No NIC on first £166pw £166pw
Main rate* charged up to £962pw no limit
2% rate on earnings above £962pw N/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 – £50,000 9.0%
On profits over £50,000 2.0%
back to top

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* Petrol Diesel
0-50 16% 20%
51-75 19% 23%
76-94 22% 26%
Above 94 Add 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).

back to top

Tax-free mileage allowances

Employee’s own transport per business mile
Cars first 10,000 miles 45p
Cars over 10,000 miles 25p
Business passengers 5p
Motorcycles 24p
Bicycles 20p
back to top

Capital Gains Tax

2019/20 2018/19
Annual exemption
Individuals, estates £12,000 £11,700
Most trusts 6,000 5,850
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.

back to top

Corporation Tax

Year to 31.3.2020
Corporation Tax rate 19%

 

Research and development relief From 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.

back to top

Main capital allowances

Plant and machinery allowances Rate
Annual Investment Allowance (AIA)
– expenditure 1.1.19 – 31.12.20 £1,000,000 100%
– expenditure pre 1.1.19 200,000 100%
Energy/water-efficient equipment 100%
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 only up to 50 up to 75 100%
In general pool up to 110 up to 130 18% pa
In special rate pool* above 110 above 130 6% 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%
back to top

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 value Annual charge to
31.3.2020 31.3.2019
£0.5m – £1m £3,650 £3,600
£1m – £2m 7,400 7,250
£2m – £5m 24,800 24,250
£5m – £10m 57,900 56,550
£10m – £20m 116,100 113,400
Over £20m 232,350 226,950

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 band LBTT – Scotland
£000
Rate on band LTT – Wales
£000
Rate on band
Up to 125 Nil Up to 145 Nil Up to 180 Nil
125 – 250 2% 145 – 250 2% 180 – 250 3.5%
250 – 925 5% 250– 325 5% 250 – 400 5.0%
925 – 1,500 10% 325 – 750 10% 400 – 750 7.5%
Over 1,500 12% Over 750 12% 750 – 1,500 10.0%
Over 1,500 12.0%

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 band LBTT – Scotland
£000
Rate on band LTT – Wales
£000
Rate on band
Up to 150 Nil Up to 150 Nil Up to 150 Nil
150 – 250 2% 150 – 350 3.0% 150 – 250 1%
Over 250 5% Over 350 4.5% 250 – 1,000 5%
Over 1,000 6%
back to top

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 1.4.2017 83,000 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 scheme Up to £150,000
Must leave scheme if annual taxable turnover Exceeds £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 scheme Up to £1.35m
Must leave scheme if annual taxable turnover Exceeds £1.60m

Option to tax property

Notify HMRC within 30 days.

back to top

Inheritance Tax

2019/20 2018/19
Nil rate band (NRB)* £325,000 £325,000
NRB Residential enhancement (RNRB)†* 150,000 125,000
Rate of tax above nil rate band** 40% 40%
Lifetime transfers to most trusts 20% 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 death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

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

back to top

Key dates and deadlines

Payment dates
Self assessment 2019/20 2018/19
1st payment on account 31 January 2020 2019
2nd payment on account 31 July 2020 2019
Balancing payment 31 January 2021 2020
Capital Gains Tax* 31 January 2021 2020

*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 NIC 19 July 2020 2019
Class 1B NIC 19 October 2020 2019

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 employees 31 May 2019
P11D, P11D(b) 6 July 2019
Self assessment tax return (SATR) paper version 31 October 2019
Online SATR if outstanding tax
to be included in 2020/21 PAYE code
30 December 2019
Online SATR 31 January 2020
back to top

Useful rates

National Minimum Wage
Rates per hour
From 1.04.19 From 1.04.18
Aged 25 and over (National Living Wage) £8.21 £7.83
Aged 21 – 24 7.70 7.38
Aged 18 – 20 6.15 5.90
Aged 16 – 17 4.35 4.20
Apprentices 3.90 3.70

 

Child Benefit (per week) 2019/20 2018/19
First eligible child £20.70 £20.70
Each subsequent child 13.70 13.70

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

back to top

NEW App to be launched soon

Making life easier for our clients...

Hanburys Phone App