Tax rates & allowances

In this document you will find...

Plant and machinery allowances 1/1/19 to 31/12/2020 Pre 1/1/19 Rate
Annual Investment Allowance (AIA) expenditure: £1,000,000 £200,000 100%
Energy/water-efficient equipment 100%
Writing down allowance: general pool (reducing balance) 18%
Writing down allowance: special rate pool (reducing balance)* 6%

Motor Cars Purchased

from 1/4/18 CO2(g/km) 1/4/15 to 31/3/18 CO2(g/km) 1/4/15 to 31/3/18 CO2(g/km)
New cars only up to 50 up to 75 100%
In general pool up to 110 up to 130 18% pa
In special rate pool* above 110 above 130 6% pa

*8% pre 1/4/19 (companies) and pre 6/4/19 (businesses subject to income tax).

Structures and building allowance Expenditure from 29/10/18 (straight line basis) = 2%

Enveloped Dwellings

The annual tax on enveloped dwellings (ATED) applies to ‘high value’ residential properties owned via a corporate structure, unless the property is used for a qualifying purpose.  The tax applies to properties valued at more than £500,000.

Property value £ Annual charge to 31/3/2020 £ Annual charge to 31/3/2019 £
Up to 500,000 Nil Nil
500,001 to 1,000,000 3,650 3,600
1,000,001 - 2,000,000 7,400 7,250
2,000,001 - 5,000,000 24,800 24,250
5,000,001 - 10,000,000 57,900 56,550
10,000,001 - 20,000,000 116,100 113,400
Over £20,000,000 232,350 226,950

Land and Buildings Transaction Tax (LBTT) Stamp Duty Land Tax (SDLT) Land Transaction Tax (LTD)

The following table relates to Residential Property (1st property only)

£000 rate
LBTT - Scotland
up to £145 nil
£145 - £250 2%
£250 - £325 5%
£325 - £750 10%
over £750 12%
SDLT - England & NI
up to £125 nil
£125 - £250 2%
£250 - £925 5%
£925 - £1,500 10%
over £1,500 12%
LTT - Wales
up to £180 nil
£180 - £250 3.5%
£250 - £400 5%
£400 - £750 7.5%
£750 - £1,500 10%
over £1,500 12%

A supplement applies for all three taxes where an additional residential property is purchased for more than £400,000 (unless replacing a main residence).  It is also payable by all corporate purchasers.  The rate is 3% (LBTT:4%) of the total purchase price.

For SDLT:
First time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of the purchase price.
A rate of 15% may apply to the total purchase price, where the property is values above £500,000 and purchased by  a non-natural person (eg. Company).

For LBTT, first time buyer relief increases the nil rate band to £175,000.

Non-residential or Mixed Property

£000 Rate
LBTT - Scotland
up to £150 nil
£150 - £250 1%
over £250 5%
SDLT - England & NI
up to £150 nil
£150 - £250 2%
over £250 5%
LTT - Wales
up to £150 nil
£150 - £250 1%
£250 - £1,000 5%
over £1,000 6%
2019/20 2018/19
Annual exemption (Individuals, Estates) £12,000 £11,700
Annual exemption for most trustees and personal representatives £6,000 £5,850
Tax rate Individual (to basic rate limit)* 10% 10%
Tax rate for Individuals (above the basic rate limit)* 20% 20%
Tax rate for Trusts, estates * 20% 20%
Tax rate for Entrepreneurs Relief (ER)** 10% 10%
Tax rate for Investors Relief (IR)*** 10% NA

*Individuals are taxed at 18%/28% on gains on residentials property and receipts of carried interest.  Trust and estates are taxed at 28% in these circumstances.

**ER are for lifetime gains of up to £10m.  Qualifying disposals include a trading business and shares in a trading company (from a minimum 5% holding) by an officer/employee.  Various conditions apply.

***Shares in an unquoted trading company may qualify for IR on lifetime gains up to £10m, if acquired by someone who is not a paid officer or employee of the company and disposed of after 5/4/19.  Various conditions apply.

Corporation tax rate - Year to 31/3/20 31/3/19
19% 19%

Research and Development Relief

Small and medium (SME) companies can claim enhanced deductions for expenditure on R&D projects at 130% of qualifying expenditure. Where the deduction is claimed and the company makes a loss, it can claim a cash credit from HMRC of 14.5% of that loss.

Research and Development Expenditure Credit (RDEC) scheme

Large company R&D Expenditure Credit (RDEC) scheme can claim an 12% uplift on the qualifying expenditure:

RDEC differs from the previous R&D scheme for large companies as it is an ‘above the line’ tax credit and can be accounted for in the profit/loss statement.

Allowances

2018/19 (£) 2019/20 (£)
Personal Allowances (PA)* 12,500 11,850
Marriage allowance (The part of the PA that is transferable to a spouse or civil partner who is not a higher or top rate taxpayer) 1,250 1,190
Blind person's allowance 2,450 2,390
Rent a room relief ** 7,500 7,500
Trading income ** 1,000 1,000
Property income ** 1,000 1,000

*PA is withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000.  There is no allowance given above £125,000 (2018/19: £123,700)
** If gross income exceeds it, the limit may be deducted instead of actual expenses.

Rate Bands

2019/20 2018/19
Basic rate: BRB £37,500 £34,500
Higher rate: HRB £37,501 - £150,000 £34,501 - £150,000
Additional rate over £150,000 Over £150,000
Personal Savings Allowance (PSA)
-Basic rate taxpayer £1,000 £1,000
-Higher rate taxpayer £500 £500
Dividend Allowance (DA) £2,000 £2,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax Rates - 2019/20 & 2018/19

General Savings Dividend Income
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profit, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest).  Scottish taxpayers are taxed at different rates on general income (see below).

To the extent that savings income falls in the first £5,000 of basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed at the ‘top slice’ of income.  The DA taxes the first £2,000 of dividend income at nil, rather than the rate that would otherwise apply.

Scottish Income Tax Rates and Bands for non-savings income

2019/20 2018/19
Starter rate 19% £2,049 Up to £2,000
Basic rate 20% £2,050 - £12,444 £2,001 to £12,150
Intermediate rate 21% £12,445 - £30,930 £12,151 to £31,580
Higher rate 41% £30,931 - £150,000 £31,581 - £150,000
Additional rate 46% over £150,000 Over £150,000

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each£100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge (For non-UK domicilled individuals who have been UK resident in at least: 2019/20 2018/19
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years £60,000 £60,000
15 of the preceding 20 tax years deemed to be UK domiciled deemed to be UK domiciled
Registered Pensions 2019/20 2018/19
Lifetime Allowance (LA) £1,055,000 £1,030,000
Annual Allowance (AA) £40,000 £40,000

Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

*Usually tapered (down to a minimum of £10,000) when adjusted income exceeds £150,000.

State Pension (per week)
Old state pension - single person £129.20 £125.95
Old state pension - married couple £206.65 £201.45
New state pension (applies to those reachign state retirement age after 5 April 2016 £168.60 £164.35
2019/20 2018/19
Individual Savings Account (ISA)
-Overall limit £20,000 £20,000
-Lifetime ISA £4,000 £4,000
Junior ISA £4,368 £4,260
EIS* - 30% relief £2,000,000 £2,000,000
EIS eligible for CGT deferral relief unlimited unlimited
Seed EIS (SEIS) - 50% relief £100,000 £100,000
SEIS - 50% excemption for reinvested gains £100,000 £100,000
Venture Capital Trust (VCT) - 30% relief £200,000 £200,000

*Amount over £1m must be invested in ‘knowledge-intensive’ companies.

Class 1 (employees) Employee Employer
Main NIC rate 12% 13.8%
No NIC on first £166 pw £166 pw
Main rate* charged up to £962 pw no limit
2% rate on earnings above £962 pw NA
Employment allowance per business** NA £3,000

*Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £962pw.

**Some businesses do not qualify, including certain sole director companies.

Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

CLASS 2 (Self employed)
Flat rate per week £3
Small profits threshold £6,365
CLASS 3 (Voluntary) Flat rate per week £15
CLASS 4 (Self employed)
On profits £8,632 - £50,000 9%
On profits over £50,000 2%

Cars

Taxable benefit: chargeable value multiplied by chargeable %.

Chargeable value: Initial list price of car (including most accessories), reduced by any capital contribution (maximum £5,000) by employee when the car is first made available.

Chargeable percentage

CO2 emissions g/km* Petrol Diesel
0 - 50 16% 20%
51 - 75 19% 23%
76 - 94 22% 26%
above 94 add 1% for every 5g/km add 1% for every 5g/km
above 164 petrol/144 diesel 37% maximum 37% maximum

*The percentages for petrol cars apply to diesel cars that meet the RDE2 standard.

Vans

Chargeable value of £3,430 (2018/19 – £3,350) if private use is more than home-to-work.  Electric vans £2,058 (2018/19 – £1,340).

Fuel

Employer provides fuel for private motoring in an employer-owned:

Car: CO2 based percentage from above table multiplied by £24,100 (2018/19 – £23,400)

Van: £655 (2018/19 – £633).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by employee (in which case there is no benefit charge).

Employee's own transport per business mile
Car first 10,000 miles 45p
Cars over 10,000 miles 25p
Business passengers 5p
Motorcycles 24p
Bicycles 20p
From 1 April 2017
Standard rate (1/6 of VAT inclusive price) 20%
Registration level from 1/4/2017 £85,000 pa
Deregistration level from 1/4/2017 £83,000 pa

From 1/4/2019 most businesses above the registration threshold must comply with the Making Tax Digital requirements.

Flat Rate Scheme (FRS)

Annual taxable turnover to enter scheme up to £150,000
Must leave scheme if annual gross turnover exceeds £230,000

If using the FRS, the Vat paid by the business is a fixed percentage (based on business category) of ‘FRS turnover’ rather than net of output tax over input tax.  Input tax is usually not recoverable.

Cash Accounting and Annual Accounting Schemes

Annual taxable turnover to enter scheme up to £1.35m
Must leave scheme if annual taxable turnover exceeds £1.6m

Option to tax property.
Notify HMRC within 30 days.

2019/20 2018/19
Nil rate band (NRB)* £325,000 £325,000
NRB Residential enhancement (RNRB)* £150,000 £125,000
Tax rate on death** 40% 40%
Tax rate on lifetime transfers to most trusts 20% 20%

RNRB is available for transfers of a main residence to direct descendants.  It tapers away at the rate of £1 for every £2 estate vlaue above £2m.

*Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.

**Rate reduced to 36% if at least 10% of the relevant estate is left to charity.

Unlimited exemption for transfers between spounse’s/civil partners, except if UK domiciled transferor and forgeign domiciled transferee, when maximum exemption £325,000.

100% Busines Property Relief (BPR) for all shareholdings if qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

Years before death 0-3 3-4 4-5 5-6 6-7
% of full death tax charge payable 100 80 60 40 20

Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.

National Minimum Wage - rates per hour from 1/4/19 from 1/4/18
Aged 25 and over (National Living Wage) £8.21 £7.83
Aged 21 - 24 £7.70 £7.38
Aged 18 - 20 £6.15 £5.90
Aged 16 - 17 £4.35 £4.20
Apprentices £3.90 £3.70
Child Benefits (per week) 2019/20 2018/19
First eligible child £20.70 £20.70
Each subsequent child £13.70 £13.70

Payment dates

Self Assessment 2019/20 2018/19
1st payment on account 31 January 2020 2019
2nd payment on account 31 July 2020 2019
Balancing payment 31 January 2021 2020
Capital Gains Tax* 31 January 2021 2020

*Non-residents with gains on UK residential property must pay CGT within 30 days of disposal unless already filling a self assessment tax return.

Other payment dates

Class 1A NIC 19 July 2020 2019
Class 1B NIC 19 October 2020 2019

Corporation Tax is due 9 months and 1 day from the end of the accounting period, unless a ‘large’ company paying by quarterly instalments.

2018/19 Filing deadlines
Issue P60s to employees 31 May 2019
P11D, P11(b) 6 July 2019
Self Assessment Tax Return (SATR) paper version 31 October 2019
Online SATR if outstanding tax to be included in 2020/21 PAYE code 30 December 2019
Online SATR 31 January 2020