Income tax rates and bands
England, Northern Ireland & Wales
| Tax bands and rates | 2020/21 | 2019/20 | |
| Basic-rate band | £37,500 | £37,500 | |
| Basic-rate tax | 20% | 20% | |
| Dividend ordinary tax rate | 7.5% | 7.5% | |
| Savings starting rate band limit* | £5,000 | £5,000 | |
| Savings starting rate - savings income | 0% | 0% | |
| Higher-rate band | Over £37,500 - £150,000 | Over £37,500 - £150,000 | |
| Higher-rate tax | 40% | 40% | |
| Dividend upper tax rate | 32.5% | 32.5% | |
| Additional-rate band over | Above £150,000 | Above £150,000 | |
| Additional-rate tax | 45% | 45% | |
| Dividend additional tax rate | 38.1% | 38.1% | |
| Personal allowance** | £12,500 | £12,500 | |
| High income child benefit charge - 1% of adjusted net income of £50,000 to £60,000 | |||
| Trading allowance*** | £1,000 | £1,000 | |
| Dividend allowance at 0% - all individuals | £2,000 | £2,000 | |
| Property allowance*** | £1,000 | £1,000 | |
| Savings allowance**** | £1,000 | £1,000 | |
| Marriage/civil partners transferable allowance***** | £1,250 | £1,250 | |
| Blind person's allowance | £2,500 | £2,450 | |
| Married couple's allowance (if at least one born before 6 April 1935) | Maximum amount | £9,075 | £8,915 |
| Tax reduction at 10% | £907.50 | £891.50 | |
| Minimum amount | £3,510 | £3,450 | |
| Tax reduction | £351 | £345 | |
| Non-domiciled remittance basis charge | |||
| Applies after UK residence in seven or more of the previous nine tax years (unless unremitted income under £2,000) | £30,000 | £30,000 | |
| Applies after UK residence in at least 12 of the previous 14 years (unless unremitted income under £2,000) | £60,000 | £60,000 | |
|
Enterprise investment scheme (EIS)**** up to |
£1m | £1m | |
| Maximum amount for EIS carry back | £50,000 | £50,000 | |
| Income tax relief rate for EIS | 30% | 30% | |
| Seed enterprise investment scheme (SEIS) | £100,000 | £100,000 | |
| Income tax relief for SEIS | 50% | 50% | |
| Venture capital trust (VCT)***** | £200,000 | £200,000 | |
| VCT tax relief rate | 30% | 30% | |
| Social investment tax relief (SITR) | £1m | £1m | |
| Income tax relief rate for SITR | 30% | 30% | |
| Golden handshake maximum tax-free | £30,000 | £30,000 | |
| Rent-a-room (exempt on gross annual rent up to) | £7,500 | £7,500 | |
| Construction industry scheme - deduction rate | |||
| Standard rate - registered | 20% | 20% | |
| Higher rate - not registered | 30% | 30% | |
| Child benefit charge - 1% of benefit per £100 of income between £50,000 and £60,000 | |||
* The starting rate does not apply if taxable income exceeds the starting rate limit.
** When the gross income is £1,000 or less. May alternatively be deducted from gross income instead of the actual expenses.
*** £500 for higher rate and £nil for additional-rate taxpayers.
**** Investment limit increases for investment in knowledge-intensive companies to £2 million.
***** Personal allowance reduced by £1 for every £2 of adjusted net income over £100,000.
****** Any unused personal allowance may be transferred to a spouse or civil partner, where the recipient is not liable to higher or additional tax.
Scotland
| 2020/21 | Band | Rate |
| Over £12,500*-£14,585 | Starter | 19% |
| Over £14,585 - £25,158 | Basic | 20% |
| Over £25,158 - £43,430 | Intermediate | 21% |
| Over £43,430 - £150,000** | Higher | 41% |
| Above £150,000 | Top | 46% |
* Assumes individuals are in receipt of the personal allowance.
** Those earning more than £100,000 will see their personal allowance reduced by £1 for every £2 earned over £100,000.
Wales
Devolution of income tax to Wales commenced in April 2019. Under this, the three rates applying in England and Northern Ireland are reduced by 10% each, and it is open to the Welsh Assembly to impose their own three rates in each of the basic, higher and additional-rate bands.
However, the Welsh Assembly has decided that the rates will all be 10%, leaving the Welsh rates unchanged from the rates in England and Northern Ireland.
Termination payments: England, Wales & Northern Ireland only
Termination payments over £30,000, which are subject to income tax, are also subject to employers NICs from 6 April 2020.
Find out what we can do for you
If you have any questions, or would like to find out how we can help you or your business, give us a call on 01582 540800 and book a free appointment today. Alternatively, you can get in touch with us by filling in our contact form.