Rates & Allowances

Inheritance Tax

Inheritance Tax		2020-21		2019-20
Nil rate band for individuals*		£325,000		£325,000
Thereafter – lifetime gifts**		20%		20%
– the lower rate on death***		36%		36%
– on death		40%		40%
Residence nil rate band****		£175,000		£150,000
* Unused nil rate band can be used by the surviving spouse or civil partner. This band is currently frozen until April 2021. Increased to 40%, subject to tapering relief, on gifts made between 3 and 7 years pre-death. Certain lifetime gifts are exempt. Special rules for business property. * A lower rate applies where 10% or more of the net estate is left to charity.
**** The inheritance tax main residence nil rate band (MRNRB) came into effect in April 2017. From 6 April 2020, the MRNRB allows for a £175,000 per person transferable allowance for married couples and civil partners when their main residence is passed down to children after their death. The MRNRB is in addition to the £325,000 inheritance tax threshold.
Years before death	0-3	3-4	4-5	5-6	6-7
% of death charge	100%	80%	60%	40%	20%
Main exempt lifetime gifts
Recurring annual gifts out of surplus income				unlimited
Annual gifts out of capital (with one year carry forward if unused)				£3,000
Small gifts (per recipient)				£250
Parental gift on marriage				£5,000
Grandparent or party to the marriage				£2,500
Other gifts on marriage (per donor)				£1,000
Business Property Relief
Shares in unquoted companies (including USM/AIM stocks)				100%
Shares in quoted companies
– shareholding up to 50%				none
– shareholding over 50%				50%
Unincorporated business or interest in a business				100%
Land, buildings, plant, and machinery used in the deceased’s business/company				50%

National Insurance

National Insurance – Rates and Allowances	2020-21	2019-20
Lower weekly earnings limit, primary Class 1	£120	£118
Upper weekly earnings limit, primary Class 1	£962	£962
The primary weekly earnings threshold	£183	£166
The secondary weekly earnings threshold	£169	£166
Employees’ primary Class 1 rate between the primary earnings threshold and upper earnings limit	12%	12%
Employees’ primary Class 1 rate above the upper earnings limit	2%	2%
Married women’s reduced rate between the primary earnings threshold and upper earnings limit	5.85%	5.85%
Married women’s rate above the upper earnings limit	2%	2%
Employers’ secondary Class 1 rate above the secondary earnings threshold	13.80%	13.80%
Class 2 weekly rate	£3.05	£3.00
Class 2 small earnings exception	£6,475 per year	£6,365 per year
Special Class 2 weekly rate for share fishermen	£3.70	£3.65
Special Class 2 weekly rate for volunteer development workers	£6.00	£5.90
Class 3 voluntary weekly rate	£15.30	£15.00
Class 4 lower profits limit	£9,500 per year	£8,632 per year
Class 4 upper profits limit	£50,000 per year	£50,000 per year
Class 4 rate between lower profits limit and upper profits limit	9%	9%
Class 4 rate above upper profits limit	2%	2%

A National Insurance tax-free allowance of £4,000 (2019-20: £3,000) is available to offset against employers’ Class 1 secondary NICs subject to certain restrictions.

From 2020/21, the allowance is restricted to employers with employer NIC liabilities of under £100,000.

No employers’ contributions are payable in respect of weekly earnings up to £962 paid to employees under 21 nor for qualifying apprentices aged under 25.

Capital Gains Tax

Capital Gains Tax: Individuals and Trustees	2020-21	2019-20
Annual exempt amount
Individuals	£12,300	£12,000
Trusts	£6,150	£6,000
Rates
Standard rate taxpayers	10%	10%
Higher rate taxpayers / Trustees	20%	20%
Limit for gains subject to entrepreneurs’ Relief	£1,000,000	£10,000,000**
Entrepreneurs’ Relief rate	10%	10%
Investors’ relief lifetime limit	10,000,000	10,000,000
Investors’ relief rate	10%	10%
* There is an 8% surcharge on the sale of chargeable residential property and carried interest (the share of profits or gains that is paid to asset managers). ** This relief was reduced to £1,000,000 with effect from 11 March 2020.

Tax Credits

Tax Credits	2020-21	2019-20
Basic element – maximum	£3,040	£1,960
Childcare element 70% of eligible costs up to £175 per week for one child, £300 for two or more children.
Child Tax Credits	2020-21	2019-20
Child element per child – maximum	£2,830	£2,780
Family element	£545	£545
If only the child tax credit is claimed, the threshold is £16,385 pa.

Pensions

Pension Contributions	2020-21	2019-20
Lifetime allowance	£1,073,100	£1,055,000
Maximum annual contribution	£40,000	£40,000
Tax on excess	Marginal rate	Marginal rate
Normal minimum pension age	55	55
Old State pension – per week**	2020-21	2019-20
Single person	£134.25	£129.20
Addition for the wife if non-contributor	£80.45	£77.45
New State Pension – per week	2020-21	2019-20
Single person	£173.75	£167.25

*The annual allowance is tapered for taxpayers whose income exceeds £240,000 (2019-20: £150,000). The allowance is reduced by £1 for every £2 that an individual’s income exceeds £240,000 (2019-20: £150,000), down to a minimum of £4,000 (2019-20: £10,000).

**Retirees that reached the State Pension age before 6 April 2016, continue to receive the Old State Pension and not the New State Pension.

Income Tax

Bands	2020-21	2019-20
Savings starting rate – 0%*	£1 – £5,000	£1 – £5,000
Basic rate 20%	£1 – £37,500	£1 – £37,500
Higher rate 40%	£37,501 – £150,000	£37,501 – £150,000
Additional rate 45%	Over £150,000	Over £150,000

Scottish rates
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
Additional rate – 46%	Over £150,000	Over £150,000

Welsh rates
Starter rate 0%*	£1 – £5,000	£1 – £5,000
Basic rate 20%	£1 – £37,500	£1 – £37,500
Higher rate – 40%	£37,501 – £150,000	£37,501 – £150,000
Additional rate – 45%	Over £150,000	Over £150,000

* The savings starting rate does not apply if non-savings income exceeds £5,000.

Income tax in Scotland and Wales is payable on non-savings and non-dividend income.

Dividend allowance	£2,000	£2,000
Dividend ordinary rate	7.5%	7.5%
Dividend upper rate	32.5%	32.5%
Dividend additional rate	38.1%	38.1%
Personal savings allowance
– basic rate taxpayers	£1,000	£1,000
– higher rate taxpayers	£500	£500
Reliefs	2020-21	2019-20
Personal allowance	£12,500	£12,500
Registered blind person’s allowance	£2,500	£2,450
The income limit for personal allowance*	£100,000	£100,000

* The personal allowance is gradually withdrawn by £1 for every £2 of income over £100,000.

Married couple allowance – tax relief given at 10%
– Born before 6 April 1935	£9,075	£8,915
– Minimum amount*	£3,510	£3,450
– Income limit	£30,200	£29,600
– Marriage allowance*	£1,250	£1,250

* A taxpayer can transfer up to £1,250 (2019-20: £1,250) of their unused personal allowance to a spouse or civil partner who is not a higher rate taxpayer.

High-Income Child Benefit Charge* on income over

£50,000

* The tax charge is levied at the rate of 1% of the full child benefit award for each £100 that income exceeds £50,000, up to a maximum of 100% of the child benefit claimed.
Taxpayers can choose whether to continue receiving child benefit and pay the tax charge or may opt-out of receiving the child benefit. There is a cap on certain Income Tax reliefs of the greater of £50,000 or 25% of income.

Stamp Duty & Stamp Duty Land Tax (SDLT)

Stamp Duty and Annual Tax on Enveloped Dwellings
Shares and securities rate of 0.5%

The annual tax on Enveloped Dwellings (ATED) is payable by certain non-natural persons that own interests in dwellings valued at more than £500,000.

Stamp Duty and Stamp Duty Land Tax (SDLT)
Property in England, Wales, and N. Ireland

Rate	Residential Property
Zero	£0 – £500,000
5%	£500,001 – £925,000
10%	£925,001 – £1,500,000
12%	Over £1,500,000

*No SDLT is temporarily payable on any purchases of up to £500,000. The reduction applies to first-time buyers (superseding existing rules) and to those who have owned property before.

*From 1 April to 5 April 2021 the previous existing SDLT rates apply – 0% up to £125,000, 2% from £125,001 – £250,000, 5% from £250,001 – £925,000.

SDLT on non-residential and mixed-use properties.

Rate	Non-Residential Property
Zero	£0 – £150,000
2%	£150,001 – £250,000
5%	Over £250,000

These rates are applied on a graduated basis with the portion of the purchase price within each tier charged at the applicable rate.

15% is applied to residential properties held in a ‘corporate envelope’ costing over £500,000.

There is a higher rate of SDLT that applies to purchases of additional residential property such as buy to let and second homes.

The rate is 3% higher than the current SDLT rates and applies to the purchase of additional residential properties valued at £40,000 and above.

No SDLT is payable for first-time buyers in England and Northern Ireland making purchases up to £300,000, and then 5% on the next £200,000.

Scotland: Land & buildings transaction tax (SLBTT)
Property in Scotland

Rate	Residential Property
Zero	£0 – £250,000
5%	£250,001 – £325,000
10%	£325,001 – £750,000
12%	Over £750,000

Non-Residential and mixed-use properties.

Rate	Non-Residential Property
Zero	£0 – £150,000
3%	£150,001 – £250,000
5.0%	Over £250,000

The zero rate band is applicable to buyers from 15/7/20 to 31/3/21.

From 1 April to 5 April 2021 the previous SLBTT rates apply. This is 0% up to £145,000 and 2% from £145,001-£250,000. For first time buyers, the 0% rate is up to£175,000.

These rates are applied on a graduated basis with the portion of the purchase price within each tier charged at the applicable rate.

There is a 4% (was 3% until 24 January 2019) SLBTT supplement for purchases of additional residential properties in Scotland valued at £40,000 and above.

Wales: Land Transaction Tax (WLTT)

Rate	Residential Property
Zero	£0 – £250,000
5%	£250,001 – £400,000
7.5%	£400,001 – £750,000
10%	£750,001 – £1,500,000
12%	Over £1,500,000

Non-Residential and mixed-use properties.

Rate	Non-Residential Property
Zero	£0 – £150,000
1%	£150,001 – £250,000
5%	£250,001 – £1,000,000
6%	Over £1,000,000

The Zero rate band is applicable to buyers from 27/7/20 to 31/3/21. From 1 April to 5 April 2021 previous WLTT rates apply – 0% from £0-£180,000 and 3.5% from £180,001-£250,000.

These rates are applied on a graduated basis with the portion of the purchase price within each tier charged at the applicable rate.

There are currently no further measures specifically targeting first-time buyers in Wales.

There is a WLTT higher rate supplement of 3% on purchases of additional residential properties costing £40,000 or more.

Minimum Wage

National Living Wage	2020-21	2019-20
Age 25 & over	£8.72 p.h.	£8.21 p.h.

National Minimum Wage	2020-21	2019-20
Aged 21 to 24	£8.20 p.h.	£7.70 p.h.
Aged 18 to 20	£6.45 p.h.	£6.15 p.h.
Aged 16 and 17	£4.55 p.h.	£4.35 p.h.
Apprentice rate	£4.15 p.h.	£3.90 p.h

VAT

Standard rate*	20%
Reduced rate	5%
Zero rate	0%
Annual registration limit (from 1 April 2020)	£85,000
Annual deregistration limit (from 1 April 2020)	£83,000
VAT Cash accounting scheme threshold	£1,350,000
VAT Annual accounting scheme threshold	£1,350,000

*5% for most tourism and hospitality activities from 15 July 2020 to 12 January 2021.

Corporation Tax

FY 2020	FY 2019
19%	19%

Car, Van & Fuel Benefits

Company cars 2020-21
For cars registered after 6 April 2020
CO2 emissions	Electric Range (miles)	% of car’s list price taxed	CO2 emissions	Electric Range (miles)	% of car’s list price taxed
(g/km)			(g/km)

0	N/A		0	100 to 104		23
1 to 50	>130		0	105 to 109		24
1 to 50	70-129		3	110 to 114		25
1 to 50	40-69		6	115 to 119		26
1 to 50	30-39		10	120 to 124		27
1 to 50	<30		12	125 to 129		28
51 to 54			13	130 to 134		29
55 to 59			14	135 to 139		30
60 to 64			15	140 to 144		31
65 to 69			16	145 to 149		32
70 to 74			17	150 to 154		33
75 to 79			18	155 to 159		34
80 to 84			19	160 to 164		35
85 to 89			20	165 to 169		36
90 to 94			21	170 and above		37
95 to 99			22

For cars registered before 6 April 2020
CO2 emissions	Electric Range (miles)	% of car’s list price taxed	CO2 emissions	Electric Range (miles)	% of car’s list price taxed
(g/km)			(g/km)

0	N/A		0	95 to 99		24
1 to 50	>130		2	100 to 104		25
1 to 50	70-129		5	105 to 109		26
1 to 50	40-69		8	110 to 114		27
1 to 50	30-39		12	115 to 119		28
1 to 50	<30		14	120 to 124		29
51 to 54			15	125 to 129		30
55 to 59			16	130 to 134		31
60 to 64			17	135 to 139		32
65 to 69			18	140 to 144		33
70 to 74			19	145 to 149		34
75 to 79			20	150 to 154		35
80 to 84			21	155 to 159		36
85 to 89			22	160 and above		37
90 to 94			23

There is a diesel supplement of 4% (2019-20: 4%) for all diesel cars that are not certified to the Real Driving Emissions 2 (RDE2) standard. The diesel supplement is removed altogether for diesel cars which are certified to the RDE2 standard. The maximum rate including any diesel supplement remains at 37%.

Car fuel benefit
£24,500 × ‘appropriate percentage’ (percentage used to calculate the taxable benefit of the car for which the fuel is provided).
The charge is proportionately reduced if the 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
Van benefit	£3,490
Fuel benefit

Mileage Allowance Payment

Cars & vans – up to 10,000 miles – over 10,000 miles	Rate per mile 2020-21 45p 25p
Motorcycles	24p
Bicycles	20p
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.

Capital Allowances

2020 – 21

2019 – 20

Plant and Machinery

– Main writing down allowance

– Long-life assets, integral fixtures

– First-year allowances (certain environmentally efficient products)

18%

100%

18%

100%

– R&D tax credits SME scheme

– R&D expenditure credit

– Structures and buildings allowance

– Annual Investment Allowance (AIA)

230%

13%

£1,000,000

230%

12%

£1,000,000

The AIA has been temporarily increased to £1 million from 1 January 2019 to 31 December 2020.

Cars

– CO2 emissions up to and including 50g/km*

– CO2 emissions over 50g/km

18%

*A rate of 100% applies to cars with CO2 emissions cars.

Tax Favoured Investments

2020-21	2019-20
ISA limited	£20,000	£20,000
Lifetime ISA	£4,000	£4,000
Junior ISA	£9,000	£4,368
Venture Capital Trusts Income Tax relief of up to 30% on investments up to £200,000.
Enterprise Investment Scheme (EIS) Income Tax relief of up to 30% on qualifying share subscriptions up to £1,000,000.
Seed Enterprise Investment Scheme (SEIS) Income Tax relief of 50% on a maximum investment of £100,000 with the rollover of chargeable gains. (Up to £2,000,000 for qualifying investments in knowledge-intensive industries).
Social Investment Tax Relief Income Tax relief at 30% of the amount invested plus Capital Gains Tax relief.

Key Dates and Deadlines

Payment Dates	2020-21	2019-20
Income Tax and Class 4 NIC’s:
First interim Income Tax payment	31 January 2021	31 January 2020
Second interim Income Tax payment	31 July 2021	31 July 2020
Final balancing Income Tax payment	31 January 2022	31 January 2021
Capital Gains Tax payment	31 January 2022	31 January 2021
Corporation Tax is due 9 months and 1 day after the end of the accounting period (or by quarterly installments if a large company).
2018-19 Return filing deadlines
Issue P60s to employees		31 May 2020
Forms P9D, P11D and P11D(b) – and appropriate copies to employees		06 July 2020
Self Assessment Tax Return – paper version		31 October 2020
SATR Online to have the unpaid tax of up to £17,000 (depending on income levels) collected through the 2020-21 PAYE code		30 December 2020
Self Assessment Tax Return – online version		31 January 2021

Disclaimer

In preparing and maintaining this section of our website every effort has been made to ensure the content is up to date and accurate. However, the law and regulations change continually, and unintentional errors can occur, and the information may be neither up to date nor accurate. We make no representation or warranty (including liability towards third parties), express or implied, as to the accuracy, reliability, or completeness of the information on the website. Please don’t act directly on anything you read – contact us first for advice on how it may affect your individual circumstances.