Gerald Charles & Co Accountants

TAX RATES & TABLES

Introduction

Our Tax Rates provides a summary of some of the essential tax rates, dates and figures for 2020/21.

These Tax Rates are for guidance only and professional advise should be obtained before acting on any information contained as no responsibility can be accepted for loss occasioned as a result of action taken or refrained from in consequence of its contents.

Income Tax

Tax Rates2019/202020/21
Basic Rate Band£37,500 £37,500
Basic rate20%20%
Dividend ordinary rate7.5%7.5%
Higher Rate – taxable income over£37,500£37,500
Higher tax rate40%40%
Additional Rate – taxable income over£150,000£150,000
Additional tax rate45%45%
Dividend upper rate32.5%32.5%
Allowances that reduce taxable income2019/202020/21
Personal allowance (PA) Under 65£12,500£12,500
Dividend Allowance£2,000 £2,000
Rent A Room Allowance £7,500£7,500

National Insurance Contributions (2020/21)

Class 1 (not contracted out)EmployerEmployee
Lower earnings limit£183
Payable on weekly earnings
£120.00 -£183.0013.8%NIL
£183,01 – £96213.8%12%
Over £96213.8%2%
Over state retirement age13.8%NIL
Class 1A (on relevant benefits)13.8%NIL
Class 1B (on PAYE settlement arrangement)13.8%NIL
Class 2 (self employed) £156.00 per year
Limit of net earnings for exception £6,475 per annum
Class 3 (Voluntary) £15,00 per week
Class 4 (*self employed on profits)
£9,501 to £50,000 9%
Excess over £50,000 2%
*Exemption applies if state retirement age was reached by 6th April 2019

Corporation Tax

Corporation tax rates and bands are as follows:

Financial year to31 March 202031st March 2021
19% 19%

Capital Allowances

Plant & Machinery

  • Energy saving and environmentally beneficial equipment, electric and low CO2 emission cars, natural gas, hydrogen refuelling equipment, first year allowance – 100%.
  • Annual investment allowance (AIA) – 100% (excludes cars and expenditure already qualifying for 100% first year allowance).
  • Writing down allowance (WDA) on expenditure not qualifying for AIA: Long-life assets, integral features of building – 6%.
  • Other plant and machinery – 18%.
  • Cars, other than electric and low CO2 emission – 6%.

Value Added Tax

 From 1st April 2019From 1st April 2020
Standard Rate20%

20%

Gross VAT fraction 1/6 1/6
Taxable Turnover Limits
Registration – last 12 months or next 30 days over£85,000£85,000
Deregistration – next 12 months under£83,000£83,000
Cash accounting scheme – up to£1,350,000£1,350,000
Optional flat rate scheme – up to£150,000£150,000
Annual accounting scheme – up to£1,350,000£1,350,000

VAT on fuel for private use in cars

Where businesses buy fuel which has some degree of private use, they must account for output VAT on a scale charge. This is based on the CO2 emissions (rounded down to the next multiple of 5). The VAT chargeable for quarters commencing after 1st May 2020 is as follows:

CO2 in g/kmVAT on chargeCO2 in g/kmVAT on chargeCO2 in g/kmVAT on charge
up to 120£24.00
120 to 125£36.17156 to 160£53.17191 to 195 £70.17
126 to 130£38.50161 to 165£55.67196 to 200£72.67
131 to 135£41.00166 to 170£58.00201 to 205£75.00
136 to 140£43.50171 to 175£60.33206 to 210£77.33
141 to 145£45.83176 to 180£62.83211 to 215 £78.83
146 to 150£48.33181 to 185£65.33216 to 220£82.17
151 to 155£50.83186 to 190£67.67221 and over£84.60

Inheritance Tax

 2019/202020/21
Standard threshold£325,000 £325,000
Combined threshold maximum for married couples and civil partners£650,000£650,000
Rate of Tax on balance:
Chargeable lifetime transfers20%20%
Transfers on, or within 7 years of, death40% 40%

All lifetime transfers not covered by exemptions and made within seven years of death will be added back into the estate for the purpose of calculating the tax payable. Tax attributable to such transfers is then reduced.

Years before death0-3 3-4 4-5 5-6 6-7
Tax reduced by0%20%40%60%80%

Vehicle Benefits

Chargeable on all employees including directors.

  1. Car benefit
  2. Car fuel benefits
  3. Company vans

Car Benefits

The tax you pay on your company car is governed by four factors:

  1. The list price of the car, on the day before it was first registered, plus certain accessories.
  2. The rate at which the car emits carbon dioxide (CO2).
  3. The fuel type, (for most types of car, this is all the information you need to work out the taxable benefit).
  4. Your marginal rate of income tax.

You can find your taxable percentage for 2020/21 using the following table:

CO2 in g/kmTaxable %CO2 in g/kmTaxable %
PetrolDieselPetrolDiesel
0 to 5014%18%106 to 11026%30%
51 to 5515%19%111 to 11527%31%
56 to 6016%20%116 to 12028%32%
61 to 6517%21%121 to 12529%33%
66 to 7018%22%126 to 13030%34%
71 to 7519%23%131 to 13631%35%
76 to 8020%24%136 to 14032%36%
81 to 8521%25%141 to 14533%37%
86 to 9022%26%146 to 15034%37%
91 to 9523%25%151 to15535%37%
96 to 10024%28%156 to 16036%37%
101 to 10525%29%161 & over37%37%

Car Fuel Benefits

If the employee pays for the full cost of all fuel for private journeys (usually including home to work) there will be no car fuel benefit. In all other cases the full tax charge will be due.

The taxable car fuel benefit, for 2020/21, is calculated by multiplying £24,500 by the same percentage as applies (or would apply) for the car benefit.

Example

A company car driver has a car which, on the day before it was first registered, had a list price of £20,000. It runs on petrol and emits 128 g/km of CO2.

If we assume the driver pays tax at 40%, the annual tax bill on the car benefit is: £20,000 x 30% x 40% = £2,4000.

If the employer provides any fuel for private journeys and is not reimbursed for the cost, the 2019/120 tax bill for the fuel benefit is: £24,500 x 30% x 40% = £2,940.

Company Vans

The taxable benefit for the unrestricted use of company vans is £3,490 (with no reduction for older vans) plus a further £666 of taxable benefit if fuel is provided by the employer or private travel.

Van and fuel chargeVanFuelTotal
Tax (20% taxpayer)£698.00£133.20 £831.20
Tax (40% taxpayer)£1,396.00£266.40£1,662.40
Employer’s Class 1A NIC’s£481.62£91.91£573.52

Van drivers can avoid a benefit charge if they agree not to use the van for personal journeys.   Driving to and from work is acceptable so long as there is a reasonable amount of business use.

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