Tax Card 2019/20

TAXABLE INCOME TAX BANDS AND RATES

  2019/20 2018/19
Starting rate* of 0% on savings up to £5,000 £5,000
Basic-rate band £37,500 £34,500
Higher-rate band £37,501 to £150,000 £34,501 to £150,000
Additional-rate band Over £150,000 Over £150,000
Basic rate 20% 20%
Higher rate 40% 40%
Additional rate 45% 45%
Dividend ordinary rate 7.5% 7.5%
Dividend upper rate 32.5% 32.5%
Dividend additional rate 38.1% 38.1%

* The starting rate does not apply if taxable income exceeds the starting rate limit.

Income tax in Scotland

  2019/20 2018/19
Band Taxable income Rates Taxable income Rates
Starter-rate £12,500 – £14,549* 19% £11,850 – £13,850* 19%
Basic-rate £14,550 – £24,944 20% £13,851 – £24,000 20%
Intermediate-rate £24,945 – £43,430 21% £24,001 – £43,430 21%
Higher-rate £43,431 – £150,000 41% £43,431 – £150,000 41%
Additional rate £150,000 46% £150,000 46%

* Assumes individuals are in receipt of the personal allowance.

Allowances that reduce taxable income or are not taxable

2019/20 2018/19
Personal allowance* £12,500 £11,850
Personal savings allowance

Basic-rate taxpayer

Higher-rate taxpayer

Additional-rate taxpayer

 

£1,000

£500

£0

 

£1,000

£500

£0

Dividend allowance at 0% – all individuals £2,000 £2,000
Marriage/civil partner transferable allowance** £1,250 £1,190
Trading allowance and property allowance each*** £1,000 £1,000
Rent-a-room allowance £7,500 £7,500
Blind person’s allowance £2,450 £2,390

* The personal allowance is reduced by £1 for each £2 of income from £100,000 to £125,000 (2018/19, £123,700).

** Any unused personal allowance maybe transferred to a spouse or civil partner, where the recipient is not liable to higher or additional rate tax.

*** Note that landlords and traders with gross income from each of these sources in excess of £1,000 can deduct the allowance from their gross income as an alternative to claiming expenses.

Allowance that reduces tax

2019/20 2018/19
Married couple or civil partnership allowance (MCA) maximum tax reduction £891.50 £869.50

Available to people born before 6 April 1935. The age for MCA is that of the elder spouse or civil partner. The loss of tax reduction is 10p for each £2 of income above £29,600 (2018/19, £28,900) until £345 (2018/19, £336) is reached.

High income child benefit charge

2019/20 2018/19
Threshold £50,000 £50,000

There is a tax charge of 1% of the child benefit received for each £100 that the threshold is exceeded up to a maximum of 100%.

VEHICLE AND FUEL BENEFITS IN KIND

The taxable benefit in kind is calculated as a percentage of the car’s UK list price.

The percentage depends on the car’s CO2 emissions in grams per kilometre (g/km). Diesel cars which are certified to RDE2 standard are treated as petrol-fuelled.

CO2 Emissions (g/km) Petrol               Diesel
0 – 50 16% 20%
51 – 75 19% 23%
76 – 94 22% 26%
Over 94 Add 1% for every 5g/km
Over 165 (petrol), 145 (diesel) 37%

 

The list price is on the day before first registration, including most accessories and is reduced by any employee’s capital contribution (max £5,000) when the car is first made available.

Where the cost of all fuel for private use is borne by the employee, the fuel benefit is nil. Otherwise, the fuel benefit is calculated by applying the car benefit percentage (above) to £24,100 (£23,400 in 2018/19).

Vans where private use is more than home-to-work travel: £3,430 (£3,350 in 2018/19) benefit and £655 (£633 in 2018/19) for private fuel. Payments by employees for private use may reduce these benefits in kind. Zero-emission vans have a benefit of £2,058 (£1,340 in 2018/19).

TAX-FREE MILEAGE ALLOWANCES

Cars and vans First 10,000 business miles 45p
Thereafter 25p
Motorcycles 24p
Bicycles 20p
Business passenger 5p

The tax-free business mileage allowance rates apply for qualifying business journeys incurred by employee’s using their own vehicles.

For national insurance purposes, a rate of 45p may apply for all business miles incurred for cars and vans.

CAPITAL GAINS TAX

2019/20 2018/19
Main rates Individual basic rate 10% 10%
Individual above basic rate 20% 20%
Trusts and estates 20% 20%
Surcharge – for gains on residential property not eligible for private residence relief and carried interest 8% 8%
Annual exemption Individuals £12,000 £11,700
Trusts £6,000 £5,850
Entrepreneurs’ relief Applicable rate 10% 10%
Lifetime limit £10m £10m
Investors’ relief Applicable rate 10% 10%
Lifetime limit £10m £10m

INHERITANCE TAX

2019/20 2018/19
Nil-rate band threshold* £325,000 £325,000
Main residence nil-rate band** £150,000 £125,000
Combined threshold limit for married couples and civil partners, including main residence nil-rate band £950,000 £900,000
Relief for businesses, unlisted/AIM companies, certain farmland/farm buildings 100% 100%

* Up to 100% of any unused part of a deceased person’s nil-rate band can be claimed by the surviving spouse/civil partner on their death. This also applies to the main residence nil-rate band, albeit the main residence nil-rate is subject to the taper withdrawal below.

** For estates in excess of £2m, a 50% taper withdrawal applies to the excess.

Tax rates

2019/20 2018/19
Main rate 40% 40%
Chargeable on lifetime transfers 20% 20%
Transfers on or within seven years of death* 40% 40%
Reduced rate** 36% 36%

* All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purposes of calculating the tax payable. This may then be reduced as shown in the table below.

** Applies if 10% or more of net chargeable estate is left to a UK-registered charity.

Years before death 0 – 3 3 – 4 4 – 5 5 – 6 6 – 7
Tax reduced by 0% 20% 40% 60% 80%

UK COMPANY TAXATION

Financial year from 1 April 2019 2018
Corporation tax main rate 19% 19%
Loans to participators 32.5% 32.5%
Diverted profits tax 25% 25%

 

MAIN CAPITAL ALLOWANCES

Initial allowances

Annual investment allowance:

on first £1m (excludes cars)*

100%
First-year allowance: for certain environmentally beneficial equipment, new and unused electric and low CO2 emission cars (up to 50g/km) 100%

*Applies from 1 January 2019 to 31 December 2020. Transitional rules may apply for chargeable periods spanning these dates.

Writing-down allowances

Plant and machinery main-rate expenditure 18%
Plant and machinery special-rate expenditure 6%
Cars 51g/km – 110g/km 18%
Over 110g/km 8%
Structures and buildings allowance – straight line 2%
Electrical charge point, energy and water-efficient equipment and electric vans 100%

VAT

From 1 April 2019 2018
Standard rate 20% 20%
VAT fraction 1/6 1/6
Reduced rate, eg on domestic fuel 5% 5%
VAT fraction 1/21 1/21
Zero rate 0% 0%
Exempt N/A N/A

Taxable turnover limits

From 1 April 2019 2018
Registration (last 12 months or next 30 days) over £85,000 £85,000
Deregistration (next year) under £83,000 £83,000
Annual and cash accounting schemes turnover limit £1.35m £1.35m
Flat-rate scheme turnover limit £150,000 £150,000

 

RESEARCH AND DEVELOPMENT (R&D)

Revenue expenditure – SMEs 230%
Capital expenditure – all companies 100%
SME company R&D payable tax credit 14.5%
Large company R&D taxable expenditure credit 12%

 

TAX-EFFICIENT INVESTMENTS

Annual investment limit 2019/20 2018/19
ISA £20,000 £20,000
Lifetime ISA* £4,000 £4,000
Help-to-buy ISA (existing savers only from 1 December 2019) £1,000 initial and £200 per month
Junior ISA and Child Trust Fund £4,368 £4,260
Venture Capital Trust at 30% £200,000 £200,000
Enterprise Investment Scheme at 30%** £1m £1m
Seed EIS (SEIS) at 50% £100,000 £100,000
SEIS capital gains tax reinvestment relief 50% 50%
Social investment tax relief at 30% £1m £1m

* Reduces ISA limit by amount invested in Lifetime ISA.

** Up to £2m in a knowledge-intensive company.

REGISTERED PENSIONS

Lifetime allowance limit £1.055m
Money purchase annual allowance £4,000
Annual allowance limit £40,000*
Minimum age for accessing benefits 55
On cumulative benefits exceeding £1.055m
Maximum pension commencement lump sum 25% of pension fund value

* Tax relief is restricted to the higher of £3,600 and net relevant earnings subject to the annual allowance which is reduced by £1 for every £2 of income to a level of £10,000 where adjusted income is over £150,000 and threshold income is over £110,000.

Subject to certain conditions, the unused amount of the annual allowance can be carried forward up to three years and used once the current year annual allowance has been fully utilised.

NATIONAL INSURANCE

Class 1
Weekly earnings Employee rate Employer rate
Up to £166 Nil* Nil
£166.01 to £962 12% 13.8%**
Over £962 2%
Over state pension age 0% 13.8%

* Entitlement to contribution-based benefits are retained for earnings between £118 and £166 per week.

** 0% for employees under 21 and apprentices under 25 on earnings up to £962 per week.

 

 

Class 1A
On relevant benefits, including car and fuel benefits 13.8%

 

Class 2
Self-employed above small profits threshold £3.00 per week
Small profits threshold £6,365 per annum

 

Class 3
Voluntary £15.00 per week

 

Class 4*
Self-employed on profits £8,632-£50,000 9%
Over £50,000 2%

* Exemption applies if the state retirement age is reached by 6 April 2019.

Employment allowance

Per employer, per year (excludes one-person companies) £3,000*

*One claim only for companies in a group or under common control. Not available where the director is the only employee paid earnings above the secondary threshold for class 1 NICs. From April 2020, this will be limited to employers with an employer NICs bill below £100,000 in the previous tax year.

Apprenticeship levy

A levy of 0.5% applies where the pay bill exceeds £3m. There is an allowance of £15,000. Further conditions apply, so please consult with us.

STAMP DUTY

Consideration on shares over £1,000 0.5%

 

PROPERTY TAXES

The incremental rate of tax is only payable on the part of the property price within each band.

An additional 3% rate (4% in Scotland) applies to the purchase of an additional residential property above £40,000 and all corporate residential properties.

England and Northern Ireland: Stamp duty land tax

On the transfer of residential property*                     On the transfer of non-residential property
£0 – £125,000 0% Less than £150,000 0%
£125,001 – £250,000 2% £150,001 – £250,000 2%
£250,001 – £925,000 5% Over £250,000 5%
£925,001 – £1.5m 10%
Over £1.5m 12%

*First-time buyers pay nothing on the first £300,000 for properties up to £500,000. A rate of 5% applies between £300,000 and £500,000.

For residential purchases by ‘non-natural persons’ over £500,000 a rate of 15% applies, subject to certain exclusions.

Scotland: Land and buildings transaction tax

On the transfer of residential property*                    On the transfer of non-residential property
£0 – £145,000 0% £0 – £150,000 0%
£145,001 – £250,000 2% £150,001 – £250,000 1%
£250,001 – £325,000 5% Over £250,000 5%
£325,001 – £750,000 10%
Over £750,000 12%

*First-time buyers pay nothing on the first £175,000.

Wales: Land transaction tax

On the transfer of residential property                    On the transfer of non-residential property
£0 – £180,000 0% £0 – £150,000 0%
£180,001 – £250,000 3.5% £150,001 –  £250,000 1%
£250,001 – £400,000 5% £250,001 – £1m 5%
£400,001 – £750,000 7.5% Over £1m 6%
£750,000 – £1.5m 10%
Over £1.5m 12%

IMPORTANT NOTICE

These rates and allowances are based on Budget 2018 announcements made by the UK and Northern Ireland, Scottish and Welsh Governments and are for information only.

All information is subject to change before 6 April 2019 and confirmation by the respective governments. The above must not be considered advice and no warranty is given for the accuracy or completeness of the details. Professional advice should be sought before making any decisions.

Rates apply to the UK and Northern Ireland unless indicated otherwise.