Are You Prepared for the New Tax Year 2020?
With all the headlines being taken up by other matters, it’s easy to overlook that 6th April saw the start of a new tax year 2020/21, so we have set out below the main taxes and allowances for the year.
Remember that we’re always on hand to answer any questions you may have, so feel free to drop us a line at any time.
No changes in main UK income tax rates and allowances:
- Personal allowance £12,500 up to £100,000 income
- Dividend allowance £2,000
- Personal savings allowance £1,000 (£500 for higher rate payers)
- Trading income allowance £1,000
- Property income allowance £1,000
- Transferable tax allowance for married couples £1,250
- Starting rate for savings £5,000 (if other income not above £5,000)
- Basic rate band £0 – £37,500
- Basic rate tax 20% (dividends 7.5%)
- Higher rate band £37,501 – £150,000
- Higher rate tax 40% (dividends 32.5%)
- Additional rate band over £150,000
- Additional rate tax 45% (dividends 38.1%)
Corporation tax remains unchanged at 19% for all UK-resident companies. There had been a plan to reduce it to 17% but this was scrapped.
Capital Gains Tax
Entrepreneur’s Relief cut from £10m to £1m of gains. This means that the majority of business owners who sell their business will still only pay tax at 10%. There had been fears that this was being scrapped altogether.
CGT on residential property must be reported and paid within 30 days
Rates and allowances
- Annual exempt amount up to £12,300
- CGT is payable rates remain unchanged at:
- 10% if you’re a standard rate income taxpayer (18% residential property)
- 20% higher ratepayer (28% residential property)
No changes to the rates for Class 1 (Employees) or Class 4 (Self Employed)
- Employees pay at 12% on salaries above £183/week and 2% above £962/week
- Employers pay at 13.8% on salaries above £169/week
- Self employed pay at £3.05/week (Class 2) and (Class 4)
- 9% on profits above £9,500
- 2% on profits above £50,000