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Inheritance Tax
National Insurance
Capital Gains Tax
Tax Credits
Pensions
Income Tax
Stamp Duty & Stamp Duty Land Tax
Minimum Wage
VAT
Corporation Tax
Car, Van & Fuel Benefits
Mileage Allowance Payments
Capital Allowances
Tax Favoured Investments
Inheritance Tax

Inheritance Tax

Inheritance Tax

2020-21

2019-20
Nil rate band for individuals*

£325,000

£325,000
Thereafter – lifetime gifts**

20%

20%
– 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 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.
**** A new inheritance tax main residence nil-rate band (MRNRB) will be introduced from April 2017. The MRNRB will eventually allow 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 existing £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 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
National Insurance

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
Primary weekly earnings threshold £183 £166
Secondary weekly earnings threshold £169 £166
Employees’ primary Class 1 rate between primary earnings threshold and upper earnings limit 12% 12%
Employees’ primary Class 1 rate above upper earnings limit 2% 2%
Married women’s reduced rate between primary earnings threshold and upper earnings limit 5.85% 5.85%
Married women’s rate above upper earnings limit 2% 2%
Employers’ secondary Class 1 rate above 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 £9,500per 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 NI tax free allowance of £4,000 (2019-20: £3,000) is available to offset against employers’ Class 1 secondary NICs subject to certain restrictions.

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

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 £1,000,000 £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).
Tax Credits
Tax Credits 2020-21 2019-20
Basic element – maximum £1,995 £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 wife if non-contributor £80.50 £77.45
New State Pension – per week 2020-21 2019-20
Single person £175.20 £168.60

 

*The annual allowance is tapered for taxpayers whose income exceeds £150,000.
The allowance is reduced by £1 for every £2 that an individual’s income exceeds
£150,000, down to a minimum of £4,000 for individuals with income of £240,000 or more.

**Retirees that reached the State Pension age before 6 April 2016,
will continue to receive the old state pension and not the new state pension.

Income Tax
Bands 2020-21 2019-20
Savings starting rate – 0%* £0 – £5,000 £0 – £5,000
Basic rate 20% £1 – £37,500 £1 – £37,500
Higher rate 40% £37,501 – £150,000 £33,501 – £150,000
Additional rate 45% Over £150,000 Over £150,000
Scottish rates
Starter rate 19% on taxable income £0 – £2,049 £0 – £2,000
Basic rate 20% £2,001 – £12,150 £2,001 – £12,150
Intermediate rate – 21% £12,151 – £31,580 £12,151 – £31,580
Higher rate – 41% £30,931 – £150,000 £31,581 – £150,000
Additional rate – 46% Over £150,000 Over £150,000

 

* Savings income is taxed at 0% up to £5,000 (0% up to £5,000). If an individuals
taxable non-savings income exceeds £5,000 then the savings rate will not be available.
** The Scottish Rate of Income Tax (SRIT) is payable on the non-savings and non-dividend
income of those defined as Scottish taxpayers.

 

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
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 £8,455
– Minimum amount* £3,510 £3,450
– Income limit £30,200 £29,600
– Marriage allowance* £1,250 £1,250

 

* A tax payer can transfer up to £1,250 of their unused personal allowance to a spouse or civil partner who is not a higher rate tax payer.

 

High Income Child Benefit Charge* on income over £50,000 £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

Stamp Duty & Stamp Duty Land Tax

Stamp Duty and Annual Tax on Enveloped Dwellings
Shares and securities rate 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 – £125,000
2% £125,001 – £250,000
5% £250,001 – £925,000
10% £925,001 – £1,500,000
12% Over £1,500,000

 

SDLT on non-residential and mixed used 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.

 

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

Rate Residential Property
Zero £0 – £145,000
2% £145,001 – £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 – £350,000
4.5% Over £350,000

 

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 25+ £8.72 p.h. £8.21 p.h.
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
Rates and Limits 2020-21 2019-20
Standard rate 20% 20%
Reduced rate 5% 5%
Zero rate 0% 0%
Annual registration limit (from 1 April 2017) £85,000 £85,000
Annual deregistration limit (from 1 April 2017) £83,000 £83,000
VAT Cash accounting scheme threshold £1,350,000 £1,350,000
VAT Annual accounting scheme threshold £1,350,000 £1,350,000
Corporation Tax
FY 2020-21 FY 2019-20
Main rate 19% 19%

There is an 8% supplementary tax on banking profits.

Car, Van & Fuel Benefits

Car, Van and Fuel Benefits

Company Car Tax BIK Rates April 2018 to March 2021
Vehicle
CO2
(g/km)		 Electric
range
(miles)		 FY 2018-19
%BIK Rate		 FY 2019-20
%BIK Rate		 FY 2020-21
%BIK Rate
Petrol,
Electric,
RDE2
Diesel*		 Non-
RDE2
Diesel*		 Petrol,
Electric,
RDE2
Diesel*		 Non-
RDE2
Diesel*		 Petrol,
Electric,
RDE2
Diesel*		 Non-
RDE2
Diesel*
0 13 17 16 20 2 6
1-50 130+ 13  17 16 20 2 6
1-50 70-129 13  17 16 20 5 9
1-50 40-69 13  17 16 20 8 12
1-50 30-39 13  17 16 20 12 16
1-50 <30 13  17 16 20 14 18
51-54 16 20 19 23 15 19
55-59 16 20 19 23 16 20
60-64 16 20 19 23 17 21
65-69 16 20 19 23 18 22
70-74 16 20 19 23 19 23
75 16 20 19 23 20 24
76-79 19 23 22 26 20 24
80-84 19 23 22 26 21 25
85-89 19 23 22 26 22 26
90-94 19 23 22 26 23 27
95-99 20 24 23 27 24 28
100-104 21 25 24 28 25 29
105-109 22 26 25 29 26 30
110-114 23 27 26 30 27 31
115-119 24 28 27 31 28 32
120-124 25 29 28 32 29 33
125-129 26 30 29 33 30 34
130-134 27 31 30 34 31 35
135-139 28 32 31 35 32 36
140-144 29 33 32 36 33 37
145-149 30 34 33 37 34 37
150-154 31 35 34 37 35 37
155-159 32 36 35 37 36 37
160-164 33 37 36 37 37 37
165-169 34 37 37 37 37 37
170-174 35 37 37 37 37 37
175-179 36 37 37 37 37 37
180-184 37 37 37 37 37 37
185+ 37 37 37 37 37 37

* Rate applies to diesel vehicles that do not meet the RDE2 standard. For diesel-hybrids, the Non-RDE2 4% diesel surcharge does not apply. All BIK rates show apply to cars registered since 1998.
Source: HMRC 2017.

Mileage Allowance Payments
Cars & vans Rate per mile 2020-21
– up to 10,000 miles 45p
– over 10,000 miles 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

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%

6%

N/A

 18%

6%

100%
– R&D tax credits SME scheme

– R&D expenditure credit

 230%

13%

 230%

12%
– – An Annual Investment Allowance of £1m will apply to investments made from 1 January 2019 until 31 December 2020. The AIA for investments before and after those dates will be £200,000
Cars
– CO2 emissions up to and including 130g/km*

– CO2 emissions over 130g/km

 18%

6%

 18%

6%

 

*A rate of 100% applies to cars with CO2 emissions of 75g/km or less.

Tax Favoured Investments

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
Income Tax relief of up to 30% on investments up to £1 million
£2 million if at least £1 million of that is invested in knowledge-intensive companies
Seed Enterprise Investment Scheme
Income Tax relief of 50% on maximum investment of £100,000.
Social Investment Tax Relief
Income Tax relief at 30% of the amount invested plus Capital Gains Tax relief.

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