TAX RATES AND ALLOWANCES
1 You should assume that the tax rates and allowances for the tax year 2020/21 and for the
financial year to 31 March 2021 will continue to apply for the foreseeable future unless you
are instructed otherwise.
2 Calculations and workings need only to be made to the nearest £.
3 All apportionments should be made to the nearest month.
4 All workings should be shown.
INCOME TAX
Normal Dividend
rates rates
Basic rate £1 – £37,500 20% 7.5%
Higher rate £37,501 – £150,000 40% 32.5%
Additional rate £150,001 and above 45% 38.1%
Savings income nil rate band – Basic rate taxpayers £1,000
– Higher rate taxpayers £500
Dividend nil rate band £2,000
A starting rate of 0% applies to savings income where it falls within the first £5,000 of taxable income.
Personal allowance
Personal allowance £12,500
Transferable amount £1,250
Income limit £100,000
Where adjusted net income is £125,000 or more, the personal allowance is reduced to zero.
Residence status
Days in UK Previously resident Not previously resident
Less than 16 Automatically not resident Automatically not resident
16 to 45 Resident if 4 UK ties (or more) Automatically not resident
46 to 90 Resident if 3 UK ties (or more) Resident if 4 UK ties
91 to 120 Resident if 2 UK ties (or more) Resident if 3 UK ties (or more)
121 to 182 Resident if 1 UK tie (or more) Resident if 2 UK ties (or more)
183 or more Automatically resident Automatically resident
Remittance basis charge
UK resident for: Charge
Seven out of the last nine years £30,000
12 out of the last 14 years £60,000
Car benefit percentage
The relevant base level of CO2 emissions is 55 grams per kilometre.
The percentage rates applying to petrol-powered motor cars (and diesel-powered motor cars
meeting the RDE2 standard) with CO2 emissions up to this level are:
51 grams to 54 grams per kilometre 13%
55 grams per kilometre 14%
A 0% percentage applies to electric-powered motor cars with zero CO2 emissions.
For hybrid-electric motor cars with CO2 emissions between 1 and 50 grams per kilometre, the
electric range of a motor car is relevant:
Electric range
130 miles or more 0%
70 to 129 miles 3%
40 to 69 miles 6%
30 to 39 miles 10%
Less than 30 miles 12%
Car fuel benefit
The base figure for calculating the car fuel benefit is £24,500.
Company van benefits
The company van benefit scale charge is £3,490, and the van fuel benefit is £666.
Individual savings accounts (ISAs)
The overall investment limit is £20,000.
Property income
Basic rate restriction applies to 100% of finance costs relating to residential properties.
Pension scheme limits
Annual allowance £40,000
Minimum allowance £4,000
Threshold income limit £200,000
Income limit £240,000
Lifetime allowance £1,073,100
The maximum contribution that can qualify for tax relief without any earnings is £3,600.
Approved mileage allowances: cars
Up to 10,000 miles 45p
Over 10,000 miles 25p
Capital allowances: rates of allowance
Plant and machinery
Main pool 18%
Special rate pool 6%
Motor cars
New cars with CO2 emissions up to 50 grams per kilometre 100%
CO2 emissions between 51 and 110 grams per kilometre 18%
CO2 emissions over 110 grams per kilometre 6%
Annual investment allowance
Rate of allowance 100%
Expenditure limit £1,000,000
Commercial structures and buildings
Straight-line allowance 3%
Cash basis accounting
Revenue limit £150,000
Cap on income tax reliefs
Unless otherwise restricted, reliefs are capped at the higher of £50,000 or 25% of income.
CORPORATION TAX
Rate of tax – Financial year 2020 19%
– Financial year 2019 19%
– Financial year 2018 19%
Profit threshold £1,500,000
VALUE ADDED TAX
Standard rate 20%
Registration limit £85,000
Deregistration limit £83,000
INHERITANCE TAX: nil rate bands and tax rates
Nil rate band £
6 April 2020 to 5 April 2021 325,000
6 April 2019 to 5 April 2020 325,000
6 April 2018 to 5 April 2019 325,000
6 April 2017 to 5 April 2018 325,000
6 April 2016 to 5 April 2017 325,000
6 April 2015 to 5 April 2016 325,000
6 April 2014 to 5 April 2015 325,000
6 April 2013 to 5 April 2014 325,000
6 April 2012 to 5 April 2013 325,000
6 April 2011 to 5 April 2012 325,000
6 April 2010 to 5 April 2011 325,000
6 April 2009 to 5 April 2010 325,000
6 April 2008 to 5 April 2009 312,000
6 April 2007 to 5 April 2008 300,000
6 April 2006 to 5 April 2007 285,000
Residence nil rate band 175,000
Rate of tax on excess over nil rate band – Lifetime rate 20%
– Death rate 40%
Inheritance tax: Taper relief
Years before death Percentage
reduction
More than 3 but less than 4 years 20%
More than 4 but less than 5 years 40%
More than 5 but less than 6 years 60%
More than 6 but less than 7 years 80%
Capital gains tax: tax rates
Normal Residential
rates property
Lower rate 10% 18%
Higher rate 20% 28%
Annual exempt amount £12,300
Capital gains tax: business asset disposal relief (formerly entrepreneurs’ relief) and investors’ relief
Lifetime limit – business asset disposal relief £1,000,000
− investors’ relief £10,000,000
Rate of tax 10%
NATIONAL INSURANCE CONTRIBUTIONS
Class 1 Employee £1 – £9,500 per year Nil
£9,501 – £50,000 per year 12%
£50,001 and above per year 2%
Class 1 Employer £1 – £8,788 per year Nil
£8,789 and above per year 13.8%
Employment allowance £4,000
Class 1A 13.8%
Class 2 £3.05 per week
Small profits threshold £6,475
Class 4 £1 – £9,500 per year Nil
£9,501 – £50,000 per year 9%
£50,001 and above per year 2%
RATES OF INTEREST (assumed)
Official rate of interest 2.25%
Rate of interest on underpaid tax 2.75%
Rate of interest on overpaid tax 0.50%
STANDARD PENALTIES FOR ERRORS
Taxpayer Maximum penalty Minimum penalty – Minimum penalty –
behaviour unprompted disclosure prompted disclosure
Deliberate and 100% 30% 50%
concealed
Deliberate but 70% 20% 35%
not concealed
Careless 30% 0% 15%
Stamp duty land tax on non-residential properties
Up to £150,000 0%
£150,001 – £250,000 2%
£250,001 and above 5%
Stamp duty
Shares 0.5%