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Tax rates, thresholds and allowances

Below you will find up to date, most common UK Tax Rates, Thresholds and Allowances that affect a business or Individual for the Tax year 2020/21.

If you have any queries on the below, please do get in touch.

  • Individual
  • Self Employed
  • National Insurance Contributions
  • Company

Individual

Personal Allowance

2019/20

2020/21

Personal Allowance – The amount of tax-free income you have each tax year

£12,500

£12,500

Limit for Personal Allowance – This is the level of income at which the Personal Allowance reduces by £1 for every £2 you earn over £100,000.

You will not receive any personal allowance when you earn over £125,000.

£100,000

£100,000

Income Tax Rates and Tax Thresholds

2019/20

2020/21

Tax band name

Tax rate, bands and thresholds

Basic rate

20% - income between £12,501 and £50,000

20% - income between £12,501 and £50,000

Higher rate

40% - income between £50,001 and £150,000

40% - income between £50,001 and £150,000

Additional rate

45% - income above £150,000

45% - income above £150,000

The above assumes that the individual has a Personal Allowance of £12,500 in the tax year, which is tax-free income. This Personal Allowance reduces by £1 for every £2 earned over £100,000.

Scottish Income Tax Rates and Thresholds

2019/20

2020/21

Tax band name

Tax rate, bands and thresholds

Starter rate

19% - income between £12,501 and £14,549

19% - income between £12,501 and £14,585

Basic rate

20% - income between £14,550 and £24,944

20% - income between £14,586 and £25,158

Intermediate

21% - income between £24,945 and £43,430

21% - income between £25,159 and £43,430

Higher rate

41% - income between £43,431 and £150,000

41% - income between £43,431 and £150,000

Additional rate

46% - income above £150,000

46% - income above £150,000

The above assumes that the individual has a Personal Allowance of £12,500 in the tax year, which is tax-free income. This Personal Allowance reduces by £1 for every £2 earned over £100,000.

Self Employed

Self-Employed National Insurance Contributions

2019/20

2020/21

Small profits threshold amount per year – Profits below this threshold incur no NI Contributions

£6,365

£6,475

Class 2 NIC – Profits above the Small Profits Threshold will incur Class 2 NIC.

£3 per week

£3.05 per week

Lower Profits Limit - Class 4 NIC's become due above this threshold.

£8,632

£9,500

Upper Profits Limit - Lower rate of Class 4 NIC is due after this threshold (from £50,001)

£50,000

£50,000

Rate of Class 4 NIC between Lower Profits Limit and Upper Profits Limit is 9%. Rate of Class 4 NIC above the Upper Profits Limit is 2%.

National Insurance Contributions

Employee National Insurance Contributions

2019/20

2020/21

Weekly

Annually

Weekly

Annually

Lower Earnings Limit – Earnings below this limit will incur no NICs

£118

£6,136

£120

£6,240

Primary Threshold – Earnings below this limit will incur no NICs

£166

£8,632

£183

£9,500

Upper Earnings Limit – Earnings above the Primary Threshold and below the Upper Earnings Limit will be taxed at 12%.

£962

£50,000

£962

£50,000

Any earnings above the Upper Earnings Limit (UEL), will be taxed at 2%

Employer National Insurance Contributions

2019/20

2020/21

Weekly

Annually

Weekly

Annually

Secondary Threshold – Employee's Earnings above this threshold will incur Employer's NIC at 13.8%

£116

£8,632

£169

£8,788

Employers can claim up to £4,000 Employers Allowance for 2020/21 tax year, if their Employers Class 1 NI liability in the previous tax year was less than £100,000, are not a public body or a sole director with no other employees.

Company

Corporation Tax

2019/20

2020/21

Corporation Tax rate

19%

19%

VAT Registration

2019/20

2020/21

VAT Registration threshold - The total turnover over 12 month period when VAT registration is required (must be done within 30 days of exceeding).

£85,000

£85,000

VAT Deregistration threshold - The total turnover over 12 month period when VAT deregistation can be requested.

Less than £83,000

Less than £83,000

VAT Accounting Schemes

VAT accounting scheme

Threshold to join scheme

Threshold to leave scheme

£150,000 or less

More than £230,000

£1.35 million or less

More than £1.6 million

£1.35 million or less

More than £1.6 million

Dividend Tax Rates

  • Tax-free dividend allowance is £2,000

  • Basic-rate taxpayers pay 7.5% on dividends

  • Higher-rate taxpayers pay 32.5% on dividends

  • Additional-rate taxpayers pay 38.1% on dividends.

The dividend tax rates for tax year 2020/21 have not changed since last tax year.

Mileage Allowances

Type of vehicle

First 10,000 miles

Above 10,000 miles

Cars and vans

45p

25p

Motorcycles

24p

24p

Bikes

20p

20p

Rates per business mile. Mileage amount (10,000 miles) is per tax year.

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