Personal Taxation

Main personal allowances and reliefs 

2020/21

2019/20

Personal allowance1

£12,500

£12,500

Marriage / Civil partner’s transferable allowance

£1,250

£1,250

Married couples’ / Civil partners’ allowance at 10%2
(if at least one born before 6/4/35)



maximum
minimum



£9,075
£3,510



 £8,915
 £3,450

Blind person’s allowance

£2,500

£2,450

Rent-a-room tax-free income

£7,500

£7,500  

Registered pension schemes

Lifetime allowance
Annual allowance3
Money purchase annual allowance

 

£1,073,100
£40,000
£4,000

 

£1,055,000
£40,000
£4,000

1 Personal allowance reduced by £1 for every £2 of adjusted net income over £100,000.
2 Reduced by £1 for every £2 of adjusted net income over £30,200 (£29,600 for 2019/20), until the minimum is reached.
3 Reduced by £1 for every £2 of adjusted income over £240,000 (£150,000 for 2019/20) to a minimum of £4,000 (£10,000 for 2019/20), subject to threshold income being over £200,000 (£110,000 for 2019/20).

Income tax rates and bands

2020/21

2019/20

UK excluding Scottish taxpayers non-savings income

20% basic rate on income up to:

£37,500

£37,500

40% higher rate on income over:

£37,500

£37,500

45% additional rate on income over:

£150,000

£150,000

All UK taxpayers

Starting rate at 0% – on savings income up to4

£5,000

£5,000

Savings allowance at 0% tax:

basic rate taxpayers

£1,000

£1,000

higher rate taxpayers

£500

£500

additional rate taxpayers

£0

£0

Dividend allowance at 0% tax – all individuals

£2,000

£2,000

Tax rate on dividend income:

basic rate taxpayers

7.5%

7.5%

higher rate taxpayers

32.5%

32.5%

additional rate taxpayers

38.1%

38.1%

4 Not available if taxable non-savings income exceeds the starting rate band

Scottish taxpayers – non-dividend, non-savings income5

 

2020/21

2019/20

19% starter rate on income up to:

£2,085

£2,049

20% basic rate on next slice of income up to:

£12,658

£12,444

21% intermediate rate on next slice up to:

£30,930

£30,930

41% higher rate on next slice up to:

£150,000

£150,000

46% top rate on income over:

£150,000

£150,000

Trusts

2020/21

2019/20

• standard rate band generally

£1,000

£1,000

• dividends (rate applicable to trusts) 38.1% 38.1%

38.1%

38.1%

• other income (rate applicable to trusts) 45% 45%

45%

45%

High income child benefit charge: 1% of benefit per £100 adjusted net income of £50,000 – £60,000.

Income tax

The personal allowance will remain at £12,500 and the higher rate threshold will stay at £50,000 for 2020/21, as announced in the 2018 Budget. In Scotland, the higher rate threshold for non-savings, non-dividend income will also be unchanged at £43,430.

Off-payroll working (IR35)

From April 2020 the responsibility for operating the off-payroll working rules in the private and third sectors will move from individual workers to the organisation, agency or other third party engaging them. The change applies to services carried out from 6 April 2020.

Car benefit

The car benefit scale charge percentages for 2020/21 will be restructured, taking account of the recently introduced Worldwide Harmonised Light Vehicle Test Programme (WLTP) emissions standards. The scales for 2020/21 are as follows:

All zero CO2 emission vehicles: 0%

Petrol and diesel hybrids with CO2 emissions 1-50g/km

Range – electric-only miles

< 30

30 – 39

40 – 69

70 – 129

130 +

Registered pre-6/4/20 (NEDC)

14%

12%

8%

5%

2%

Registered post-5/4/20 (WLTP) 

12%

10%

6%

3%

0%

All non-diesel cars over 50 g/km CO2 

51-54

55 & over

Registered pre-6/4/20 (NEDC)

15%

16%*-37%

Registered post-5/4/20 (WLTP)

13%

14%*-37%

All diesels that do not meet RDE2 standards: add 4% to the above, subject to a maximum 37% scale charge.

*Increased for every extra 5g/km by 1% up to the maximum 37%

The rates will increase by 1% in 2021/22 and a further 1% in 2022/23 before being frozen until 2024/25.

Increasing the flat rate deduction for homeworking

From April 2020 the maximum flat rate income tax deduction available to employees to cover additional household expenses will increase from £4 per week to £6 per week, where they work at home under homeworking arrangements.

Tax treatment of welfare counselling provided by employers

The scope of non-taxable counselling services will be extended from April 2020 to include related medical treatment when it is provided to an employee as part of an employer’s welfare counselling services.

Employment allowance

The employment allowance will be increased from £3,000 to £4,000 a year for 2020/21, as previously announced. But it will be restricted to employers with an employer Class 1 national insurance contributions (NICs) bill below £100,000 in 2019/20.

National insurance contributions

The primary threshold (employee contributions) for Class 1 NICs and the lower profits limit for Class 4 NICs will rise to £9,500 for 2020/21, as announced in January 2020. However, the secondary threshold (employer contributions) will not move in parallel, but instead it will increase to £8,788.

Saver
Don’t lose your personal allowance.
Your personal allowance of £12,500 in 2020/21 is reduced by 50p for every pound by which your income exceeds £100,000. You could make a pension contribution or a charitable gift to bring your income below £100,000.

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