Capital Allowances | Capital Gains Tax | Car, Van and Fuel Benefits | Corporation Tax | Child Benefit | Income Tax Rates | Income Tax Reliefs | New Individual Savings Accounts (NISAs) | Inheritance Tax | Statutory Pay Rates | Mileage Allowance Payments | National Insurance | Pension Premiums | Land and Buildings Transaction Tax | Stamp Duty & Stamp Duty Land Tax | Tax Reliefs for Individuals | Value Added Tax
Tax Rates & Allowances 2020/21
Many of the tax rates and allowances are fundamental to our business and personal lives and the main ones are summarised here. We are sure that you will find it a useful point of reference throughout the coming tax year but if you have any questions please contact us.
Capital Allowances
| Expenditure incurred: | Annual limit £ |
|---|---|
1 January 2019 to 31 December 2020 | 1,000,000 |
From 1 January 2021 | 200,000 |
Plant and Machinery - Annual Investment Allowance (AIA)
The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long life assets but not cars, of up to £1,000,000 p.a. for expenditure incurred on or after 1 January 2019. The previous rate was £200,000 p.a. Special rules apply to accounting periods straddling this date.
Any costs over the AIA fall into the normal capital allowance pools below. The AIA may need to be shared between certain businesses under common ownership.
Other Plant and Machinery Allowances
The annual rate of allowance is 18%. A 6% rate applies to expenditure incurred on integral features and on long-life assets.
A 100% first year allowance may be available on certain energy efficient plant and cars, including expenditure incurred on new and unused zero emission goods vehicles.
Cars
For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools. Cars with CO2 emissions not exceeding 110gm/km receive an 18% allowance p.a. Cars with CO2 emissions over 110gm/km receive a 6% allowance p.a.
Entrepreneurs’ Relief
The first £10m of qualifying gains are charged at 10%. This is reduced to £1 million for disposals on or after 11 March 2020, subject to certain transaction rules.
Car, Van and Fuel Benefits
Company cars 2020/21
| CO2 emissions (gm/km) (round down to nearest 5gm/km for values above 95) | % of car's list price taxed |
|---|---|
0-50* | 16 |
51-75* | 19 |
76-94* | 22 |
95 | 23 |
| 100 | 24 |
| 105 | 25 |
| 110 | 26 |
| 115 | 27 |
| 120 | 28 |
| 125 | 29 |
| 130 | 30 |
| 135 | 31 |
| 140 | 32 |
| 145 | 33 |
| 150 | 34 |
| 155 | 35 |
| 160 | 36 |
| 165 and above | 37 |
CAR, VAN AND FUEL BENEFITS
-
The car benefit is calculated by multiplying the car's list price, when new, by a percentage linked to the car's CO2 emissions.
-
For diesel cars add a 4% supplement (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard) but the maximum is still 37%.
-
The list price includes accessories.
-
The list price is reduced for capital contributions made by the employee up to £5,000.
-
Special rules may apply to cars provided for disabled employees.
-
For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size.
*Rounding down to the nearest 5gm/km does not apply.
Car Fuel Benefit 2020/21
£24,500 x ‘appropriate percentage’ *
*Percentage used to calculate the taxable benefit of the car for which the fuel is provided.
The charge does not apply to certain environmentally friendly cars.
The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Van Benefit per Vehicle 2020/21
Van benefit £3,490
Fuel benefit £666
The charges do not apply to vans if a 'restricted private use condition' is met throughout the year.
A reduced charge may be due if the van cannot in any circumstances emit CO2 by being driven.
Corporation Tax
Year to 31.3.21
| Profits Band £ | Rate % |
|---|---|
All Profits | 19 |
Year to 31.3.20
| Profits Band £ | Rate % |
|---|---|
All Profits | 19 |
Year to 31.3.19
| Profits Band £ | Rate % |
|---|---|
All Profits | 19* |
*The profits limits are reduced for accounting periods of less than 12 months and for a company with associated companies.
Different rates apply for ring-fenced (broadly oil industry) profit.
2019/20
| Profits Band £ | Rate % |
|---|---|
0 - 5,000 | 0* |
| 0- 33,500 | 20** |
| 33,501 - 150,00 | 40*** |
| Over 150,00 | 45**** |
2018/2019
| Profits Band £ | Rate % |
|---|---|
0 - 5,000 | 0* |
| 0- 33,500 | 20** |
| 33,501 - 150,00 | 40*** |
| Over 150,00 | 45**** |
*Only applicable to savings income. The rate is not available if taxable non-savings income exceeds £5,000. For 2016/17, £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.
** Except dividends (7.5%).
*** Except dividends (32.5%).
**** Except dividends (38.1%).
Other income taxed first, then savings income and finally dividends. For 2016/17 the first £5,000 of dividends are tax-free.
Income Tax Reliefs
Personal Allowance
Born after 5th April 1935
2020/2021 - £12,500
2019/2020 - £12,500**
2018/2019 - £11,850**
(Reduce personal allowance by £1 for every £2 of adjusted net income over £100,000.)
**£1,060 may be transferable between certain spouses where neither pay tax above the basic rate
Married Couple's Allowance (relief at 10%)*
2020/2021 - £1,250
2019/2020 - £1,250
2018/2019 - £1,185
(Either partner 75 or over and born before 6 April 1935.)
Maximum Reduction in Tax Bill
2020/2021 - £907.50
2019/2020 - £891.50
2018/2019 - £869.50
Minimum Amount
2020/2021 - £351.10
2019/2020 - £345.00
2018/2019 - £N/A
*Age Allowance Income Limit
2020/2021 - £30,200
2019/2020 - £29,600
2018/2019 - £28,900
(Reduce age allowance by £1 for every £2 of adjusted net income above this limit.)
Blind Person’s Allowance
2020/2021 - £2,500
2019/2020 - £2,450
2018/2019 - £2,390
New Individual Savings Accounts (NISAS)
Overall Investment Limit
2020/2021 - £20,000
2019/2020 - £20,000
Junior Account Limit
2020/2021 - £9,000
2019/2020 - £4,368
Help to Buy ISA Monthly Subscription limit (Initial deposit limit £1000)
2020/2021 - £200
2019/2020 - £200
Lifetime ISA Annual Investment Limit
2020/2021 - £4,000
2019/2020 - £4,000
Inheritance Tax
Death Rate | Lifetime Rate | Chargeable Transfers 2019/20 & 2018/19 |
|---|---|---|
Nil | Nil | 0 - £325,000* |
| 40% | 20% | Over £325,000 |
*Potentially increased for surviving spouses or civil partners who die on or after 9 October 2007 *Death rate if sufficient charitable legacies made 36%.
Reliefs
Annual Exemption - £3,000
Small Gifts - £250
Marriage
- Parent - £5,000
- Grandparent - £2,500
- Bride/Groom - £2,500
- Other - £1,000
Reduced charge on gifts within seven years of death
Years before death | % of death charge |
|---|---|
0-3 | 100 |
| 3-4 | 80 |
| 4-5 | 60 |
| 5-6 | 40 |
| 6-7 | 20 |
Statutory Pay Rates
Weekly Benefit
Basic Retirement Pension -
Single Person:
2020/21 - £134.25
2018/19 - £125.95
2017/18 - £122.30
New State Pension
2020/21 - £175.20
2018/19 - £164.35
2017/18 - £159.55
Statutory Pay Rates - Average Weekly
Earnings £116 (£112) or over
Statutory Sick Pay
2020/21 - £95.85
2019/20 - £94.25
2018/19 - £92.05
Statutory Maternity Pay
First six weeks (90% of weekly earnings)
Next 33 weeks
2020/21 - £151.20*
2019/20 - £148.68*
2018/19 - £145.18*
Statutory Paternity Pay - two weeks
2019/20 - £148.68*
2018/19 - £145.18*
2017/18 - £140.98*
Statutory Adoption Pay - 39 weeks
* Or 90% of weekly earnings if lower.
Mileage Allowance Payments
2020/21 & 2019/20
Cars and Vans | Rate per Mile |
|---|---|
Up to 10,000 miles | 45p |
| Over 10,000 miles | 25p |
| Bicycles | 20p |
| Motorcycles | 24p |
These rates represent the maximum tax-free mileage allowances for employees using their own vehicles for business. Any excess is taxable. If the employee receives less than the statutory rate, tax relief can be claimed on the difference.
National Insurance
2020/21 and Class 1 (Employed) Rates
Employee
Earnings per week | % |
|---|---|
Up to £183 | Nil* |
| £1183.01 - £962 | 12 |
| Over £962 | 2 |
Employer**
Earnings per week | % |
|---|---|
Up to £169 | Nil* |
| Over £169 | 13.8** |
*Entitlement to contribution-based benefits retained for earnings between £120 and £1183 per week.
**The rate is 0% for employees under 21 and apprentices under 25 on earnings up to £962.
Class 1A (employers) - 13.8% on employee taxable benefits
Class 1B (employers) - 13.8% on PAYE Settlement Agreements
Class 2 (self-employed) - flat rate per week £3.05 - small profits threshold £6,475 p.a.
Class 3 (voluntary) - flat rate per week £15.30
Class 4 (self-employed) - 9% on profits between £9,500.01 and £50,000 plus 2% on profits over £50,000.
Pension Premiums
2020/21 and 2019/20
Tax relief available for personal contributions: higher of £3,600 (gross) or 100% of relevant earnings. Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
The limit may be reduced to £4,000 once money purchase pensions are accessed.
Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
Employers will obtain tax relief on employer contributions if they are paid and made 'wholly and exclusively'. Tax relief for large contributions may be spread over several years.
Employer's staging date to 5 April 2019
| Employer minimum contribution | Total minimum contribution | |
|---|---|---|
Employer's staging date to 5 April 2019 | 1% | 2% |
| 6 April 2018 to 5 April 2019 | 2% | 5% |
| 6 April 2019 onwards | 3% | 8% |
2020/21 | |
|---|---|
Automatic Enrolment Earnings Trigger | £10,000 |
| Qualifying earnings band - lower limit | £6,240 |
| Qualifying earnings band - upper limit | £50,000 |
Land and Buildings Transaction Tax
Land and Buildings in Scotland
Rate** | Residential |
|---|---|
0% | up to 145,00 |
| 2% | 145,000 - 250,000 |
| 5% | 250,001 - 325,000 |
| 10% | 325,001 - 750,000 |
| 12% | Over 750,001 and above |
Rate** | Non-Residential |
|---|---|
0% | up to 150,000 |
| 1% | 150,001 - 250,000 |
| 5% | Over 250,000 |
The rates apply to the portion of the total value which falls within each band in respect of transactions with an effective date on or after 1 April 2015.
**Rates may be increased by 3% where further residential properties costing £40,000 or over are acquired on or after 1 April 2016
Stamp Duty and Stamp Duty Land Tax
Land and Buildings in England, Wales, and N. Ireland
First-time Buyers Relief
Rate** | Residential |
|---|---|
0% | 0 - 300,000 |
| 5% | 300,001 - 500,000 |
| Normal Rates Apply | Above 500,000 |
Rate** | Residential |
|---|---|
0% | 0 - 125,000 |
| 2% | 125,001 - 250,000 |
| 5% | 250,001 - 925,000 |
| 10% | 925,001 - 1,500,000 |
| 12% | 1,500,001 and above |
Rate** | Non-Residential |
|---|---|
0% | 0 - 150,000 |
| 2% | 150,001 - 250,000 |
| 5% | Over 250,000 |
*Payable on consideration which falls in each bracket.
**Payable on total consideration once limit is breached.
***Rates may be increased by 3% where further residential properties costing £40,000 or over are acquired on or after 1 April 2016.
From 22 November 2017 first time buyers may be eligible for first time buyer relief on purchases of residential property up to £500,000. The rates apply to the portion of the total value which falls within each band.
SDLT is charged at 15% on interests in residential dwellings costing more than £500,000 purchased by certain non-natural persons.
Shares and securities - rate 0.5%.
Tax Reliefs for Individuals
2020/21 and 2019/20
Enterprise Investment Scheme (EIS)
Relief on investments in certain unquoted trading companies up to £1m p.a.:
- Income tax relief at 30%.
- Exempt CGT treatment on disposal if held for 3 years.
Unlimited amounts of capital gains from the disposal of other assets may be able to be deferred by making an EIS investment.
Seed Enterprise Investment Scheme (SEIS)
Relief on investments in certain unquoted trading companies up to £100,000 p.a.:
- Income tax relief at 50%.
- Exempt CGT treatment on disposal if held for 3 years.
Capital gains from the disposal of other assets may be exempt up to £50,000 p.a. by making an SEIS investment.
Venture Capital Trusts (VCTs)
Relief on investments in certain quoted companies up to £200,000 p.a.:
- Income tax relief at 30%.
- Dividend income exempt
- Exempt CGT treatment on disposal if held for 3 years.
Dividends received from VCTs may be exempt from income tax.
Social Investment Relief (SIR)
Relief on investments in certain social enterprises (including charities)up to £1m p.a.:
- Income tax relief at 30%.
- Exempt CGT treatment on disposal if held for 3 years.
Capital gains from the disposal of other assets may be able to be deferred by making an SIR investment.
(All relief is subject to detailed conditions being met.)
Value Added Tax
Standard rate - 20%
Reduced rate - 5%
Annual Registration Limit - from 1.4.20 (1.4.20 - 31.3.21 £85,000) - £85,000
Annual Deregistration Limit - from 1.4.20 (1.4.20 - 31.3.21 £83,000) - £83,000
Disclaimer
This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.