2020 rates and allowances
Written by Ray Coman
National Insurance Contributions
All UK taxpayers are liable to national insurance between the age of 16 and state pension age. A person outside of these age limits is not liable to national insurance on their income.
National Insurance Contributions on Employment
| Class 1 | 2020-21 | ||
| Employer | Employee | ||
| Earnings per Month | Rate Payable | Earnings per Month | Rate payable |
| £0.01 - £732.00 | Nil | £0.01 - £792.00 | Nil |
| £732.01-£4,167.00 | 13.80% | £792.01-£4,167.00 | 12% |
| Over £4,167.00 | 13.80% | Over £4,167.00 | 2% |
| Class 1A & 1B (employers only) | 13.80% | ||
National Insurance Contributions on Self-Employment
| Rate Payable | Earnings per year | |
| Class 2 (Self Employed) | £3.05 per week | above small profit threshold of £6,475 |
| Class 3 (Voluntary) | £15 per Week | |
| Class 4 (Self Employed) | 0% | Profits up to £9,500 |
| 9% | Profits from £9,500 to £50,000 | |
| 2% | Profits above £50,000 per annum |
Income Tax
Income tax is payable on almost all forms income with exception of tax free income
Income tax rates
|
Rate |
2020-21 |
Rate |
2019-20 |
Rate | Notes |
| Individuals - UK | |||||
|
Starting rate |
£1 to £5,000 |
20% | £1 to £5,000 | 20% | A, D |
|
Basic rate |
£5,001 to £37,500 |
20% |
£5,001 to £37,500 |
20% | B, C, D |
|
Higher rate |
£37,501 to £150,000 |
40% |
£37,501 to £150,000 |
40% | B, D |
|
Additional rate |
Over £150,000 |
45% |
Over £150,000 |
45% | B,D |
| Trusts | |||||
| Standard rate | £1 - £1,000 |
20% | £1 - £1,000 |
20% | B |
| Trust rate | Over £1,000 |
45% | Over £1,000 |
45% | B |
A Rate on non-dividend savings income up to £5,000 is 0% where taxable non-savings income does not exceed £5,000
B A dividend allowance effectively taxes the first £2,000 dividends received at 0%. Dividends above this limit are taxed at 7.5% for basic and standard rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional and trust rate taxpayers.
C Basic rate band increased by Gross Gift Aid donations and most personal pension contributions
D Scottish income tax and rate bands apply to earned, pensions and property income of Scottish taxpayers. UK income tax rates and bands apply for other income, including savings and dividend income, of Scottish taxpayers. The Scottish Budget will be announced on 12 December 2018 and the Scottish rates and bands for 2019/20 will then be updated. With effect from 6 April 2019, the Welsh Government also has the right to set the Welsh rate of income tax that applies to earned, pension and property income of Welsh taxpayers in addition to the UK rates less 10%. The Welsh Government has set the Welsh rate on income tax at 10% for 2019/20, leaving the combined UK plus Welsh rates the same as those applying in England and Northern Ireland.
Savings income is assessed to income tax after non-savings. Typically non-saving income will include pension, self-employment profits and employment earnings. To the extent that the starting rate is not used up by non-savings income, the lower rate will apply to savings income.
Rates of income tax on dividends
|
Rate |
2020-21 |
2019-20 |
| Dividend Allowance | £2,000 | £2,000 |
| Basic rate | 7.5% | 7.5% |
| Upper rate | 32.5% | 32.5% |
|
Additional rate |
38.1% |
38.1% |
Personal allowances
|
Income Tax allowances |
2020-21 |
2019-20 |
Note |
|
Personal Allowance (basic) |
£12,500 |
£12,500 |
A, B |
|
Married/Civil partners allowance |
£8,915 |
£8,915 |
B, C |
|
Minimum Married/Civil partners allowance |
£3,460 |
£3,460 |
B, C |
|
Income Limit |
£29,600 |
£29,600 |
B |
|
Blind persons allowance |
£2,450 |
£2,450 |
|
|
Rent a room limit |
£7,500 |
£7,500 |
|
|
Savings allowance |
£1,000 |
£1,000 |
D |
|
Trading income |
£1,000 |
£1,000 |
E |
| Property income | £1,000 |
£1,000 |
A Reduced by £1 for every £2 of income over £100,000
B Non-residents may not be entitled to personal allowance, in certain circumstances
C Available to persons born before 6 April 1935. Relief limited to 10%. Reduced to minimum allowance by £1 for every £2 over income limit. Apply personal allowance reduction first
D £500 for higher rate and £nil for additional rate taxpayers
E If gross income is in excess of £1,000, a deduction of £1,000 is permitted instead of actual expenses
Note: High income child benefit charge - 1% of the benefit per £100 of adjusted net income over £50,000. 100% of the benefit when adjusted net income is over £60,000
For Scottish residents only the following rates apply
|
Rate |
2020-21 |
Rate |
2019-20 |
Rate | Notes |
|
Starter rate |
£1 - £2,049 |
19% | £1 - £2,049 | 19% | B |
|
Basic rate |
£2,050 to £12,444 |
20% |
£2,050 - £12,444 |
20% | A, B |
|
Intermediate Rate |
£12,445 - £30,930 |
21% |
£12,445 - £30,930 |
21% | B |
|
Higher Rate |
£30,931 - £150,000 |
41% |
£30,931 - £150,000 |
41% | B |
| Top/Additional Rate | Over £150,000 | 46% | Over £150,000 | 46% | B |
A Basic rate band increased by Gross Gift Aid donations and most personal pension contributions
B Scottish income tax and rate bands apply to earned, pensions and property income of Scottish taxpayers. UK income tax rates and bands apply for other income, including savings and dividend income, of Scottish taxpayers. The Scottish Budget will be announced on 12 December 2018 and the Scottish rates and bands for 2019/20 will then be updated. With effect from 6 April 2019, the Welsh Government also has the right to set the Welsh rate of income tax that applies to earned, pension and property income of Welsh taxpayers in addition to the UK rates less 10%. The Welsh Government has set the Welsh rate on income tax at 10% for 2019/20, leaving the combined UK plus Welsh rates the same as those applying in England and Northern Ireland.
Pension Rates
|
|
2020-21 | 2019-20 | Note |
| £1,073,000 | £1,055,000 | ||
| £40,000 | £40,000 | A | |
| Minimum Annual Allowance | £4,000 | £10,000 | |
| Income Threshold | £190,000 | £100,000 | |
| Adjusted Income Threshold | £240,000 | £150,000 |
Capital Allowances
|
|
2020-21 | 2019-20 | Note |
| Plant and machinery | |||
| Annual investment allowance | 100% | 100% | A |
| Long life assets and integral features | 6% | 6% | B |
| Other assets | 18% | 18% | B |
| First year allowances | 100% | 100% | C |
| Cars: CO2 emissions (g/km) | |||
| 50 or less | 100% | 100% | |
| 51 - 110 | 18% | 18% | B |
| Over 110 | 6% | 6% | B |
| Structures and buildings | 2% | 2% | D |
A Maximum annual investment allowance £200,000 pa from 1 January 2021 (£1,000,000 pa for the year to 31 December 2020).
B Reducing balance
C Available for: research and development (no time limit); enterprise zone (assisted areas) until designated dates between 31 March 2020 and 16 March 2024; energy saving and environmentally beneficial (water efficient) technologies until 31 March 2020/5 April 2020; brand new low emission cars and gas refuelling stations until 31 March 2021; zero-emission goods vehicles until 31 March 2021/5 April 2021; and electric vehicle charge points until 31 March 2023/5 April 2023.
D Expenditure on non residential structures and buildings on construction contracts entered into on or after 29 October 2018.
National Minimum Wage
All rates are on hourly basis
| Category of worker | 2020/21 | 2019/20 |
| Aged 25 and above (national living wage rate) | £8.72 | £8.21 |
| Aged 21 to 24 inclusive | £8.20 | £7.70 |
| Aged 18 to 20 inclusive | £6.45 | £6.15 |
| Aged under 18 (but above compulsory school leaving age) | £4.55 | £4.20 |
| Apprentices aged under 19 | £4.15 | £3.90 |
| Apprentices aged 19 and over, but in the first year of their apprenticeship | £4.15 | £3.90 |
State Pension
|
2020-21 |
2019-20 | |||
| Weekly | Annual | Weekly | Annual | |
| Single Tier Pension | £175.20 | £9,110.40 | £168.60 | £8,767.00 |
| Basic State pension | £134.25 | £6,981.00 | £129.20 | £6,718.40 |
| Basic State Pension for Married Couple | £214.70 | £11,164.40 | £206.65 | £10,745.80 |
Statutory Sick Pay
| Description | 2020/21 | 2019/20 |
| Sick Pay | £95.85 per week | £94.25 per week |
| Weekly threshold for eligiblity | £120 a week | £118 a week |
