Key points for the 2020/21 tax year

Published: 10 June 2020

• Personal allowance remains at £12,500 (the standard tax code for PAYE will be 1250L) and the lower limit for an individual to preserve their NIC credits will be £732 per month or £8,788 per annum.

• The higher rate tax threshold stays at £37,501 for tax at 40% and the upper rate of 45% over £150,000. Different rates and thresholds apply to Scottish taxpayers.

• The dividend allowance remains at £2,000 & dividends will continue to be taxed at 7.5%, 32.5% and 38.1% respectively beyond that.

• The savings starting rate allowance of £5,000 (ie taxed at 0% if within this) continues to apply if your total taxable non-savings income is less than £5,000. If you’re in the basic rate band, you will receive a £1,000 personal savings allowance for interest and £500 if you are in the higher rate band.

• The capital gains tax exempt amount totals £12,300. Entrepreneurs relief has reduced to cover only the first £1m (previously £10m) of qualifying gains on disposals after 11 March 2020.

• Pension limit remains at £40,000 with the lifetime allowance increasing to £1,073,100.

• Employment allowance increases to £4,000 from April 2020 but is only available to employers with an employer’s national insurance bill of less than £100k for the year ended 5 April 2020.

• VAT threshold continues to be £85,000. • Corporation tax rates remain at 19%.

• Capital allowances – The annual investment allowance stays at £1m until 31 December 20 with a 100% deduction for qualifying expenditure AIA.

• The structures and building allowance (SBA) has increased to 3% per annum from April 20, which covers expenditure on physical construction works and applies to new non-residential structures and buildings.

• The writing down allowance remains unchanged at 18% on plant & machinery and 6% for integral features.

We will be sending out our tax rate cards that detail all the key rates and allowances for 2020/21 – if you need any additional copies, please let us know.