TAX RATES 2020 - 2021

Brief Summary

(please ask for elucidation)

PERSONAL INCOME TAX

Income tax personal allowance (under 65) within £100,000 limit is £12,500 (£12,570 in 2021/22)

• additional allowances possibly available for elderly

• possible to transfer 10% of personal allowance to partner if married or in civil partnership

• personal allowance reduces gradually after income/ profit of £100,000

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Income tax rates (after personal allowances):

  0% - Savings income starting rate for income up to £5,000 - with limitations

  0% - Dividend allowance up to £2,000

20% - Basic rate of tax for income between £12,500 - £46,500

40% - Higher rate of tax for income between £46,500 - £150,000

45% - Additional rate for income over £150,000

SELF-EMPLOYED NATIONAL INSURANCE

• Class 2 national insurance £3.05 per week (small earnings exception £6,475 pa)

• Class 4 national insurance on profits of £9,501 - £50,000 is 9%

• Class 4 national insurance on profits above £50,000 is 2%

CORPORATE TAX RATES

Corporation tax rate is 19% in financial years ending 31/3/21 and 31/3/22.

VAT REGISTRATION LIMIT

Sales of £85,000 from 1 April 2018 (cumulative 12 months); De-registration level £83,000 from 1 April 2018.

CAPITAL GAINS TAX

Exemption is £12,300 of gain for individuals (for 2020/21 & 2021/22).
Gain to basic rate taxed at 10%, gain above basic rate at 20% (8% surcharge for residential property). Trusts and Estates taxed at 20% with reduced £6,150 allowance.
Entrepreneurs relief - taxed at 10% up to lifetime limit of £10 million

CAR MILEAGE ALLOWANCE

45p a mile for upto 10,000 miles, then 25p.

INHERITANCE TAX THRESHOLD

£325,000. IHT 40% on excess (20% for lifetime transfers to and from certain trusts).
If more than 10% of net estate left to Charity then 36%. Annual exempt gifts £3,000.
Tax charge reduces by 20% annually after 3 years of death on gifts, (taxable percentage is 80%, 60%, 40%, 20% and NIL after 7 years).