Every year the tax rates in the UK change. This year, on the 5th April, the tax year ended and with it came new modifications. If you’re a business owner it can be hard to keep up-to-date with the changes. To help, we’ve highlighted the important ones that will likely affect you and your business.
Personal Tax Rates
|Personal Allowance – tax-free income amount||11,850||12,500|
|The income limit for Personal allowance – when you earn above this amount your eligibility for the personal allowance reduces.
For each £2 over you lose £1 of a personal allowance
Income Tax Rates
|Basic Rate – earnings between £12,501 and £50,000 (19/20)||20 %||20 %|
|Higher Rate earnings between £50,001 and £150,000 (19/20)||40 %||40 %|
|Additional Rate on earnings above £150,000 (19/20)||45 %||45 %|
Dividend Tax Rates
- Dividend allowance – £2,000
- Basic – rate tax of £7.5%
- Higher – rate tax of 32.5%
- Additional – rate tax of 38.1%
Employee National Insurance
|18/19 – Annually||19/20 – Annually|
|Lower Earnings Limit (LEL) – below this incur no NICs||£6,032||£6,136|
|Primary Threshold (PT) – below this incur no NICs||£8,424||£8,632|
|Upper Earnings Limit (UEL)– earnings between the PT and UE will be taxed at 12 %||£46,350||£50,000|
Any earnings above the UEL are taxed at 2%
Employer National Insurance
ISA Savings Limit
ISAs are savings accounts where you don’t pay tax on the interest or gains made. The maximum amount you can save is £20,000 for 2019/20.
Self Employed National Insurance Contributions
National Insurance liability.
|Small profits threshold – Earnings below this threshold incur no NICs.||£6,205||£6,365|
|Class 2 NICs – for those earning above the Small profits threshold||£2.95 per week||£3.00 per week|
|Lower Profits Limit – Earnings up to this limit incur only Class 2 NICs. Over this limit incurs Class 4 NICs.||£8,424||£8,632|
|Upper Profits Limit – Earnings up to this limit incur:
Class 2 NICs
Class 4 NICs at 9% of the profit between the Lower Profits Limit and Upper Profits Limit.
|Earnings above the Upper Profits Limit
Any earnings above this limit incur:
Class 2 NICs
Class 4 NICs at 9% of the profit between the Lower Profits Limit and Upper Profits Limit
Class 4 NICs at 2% of the profit above the Upper Profits Limit.
|Over £46,350||Over £50,000|
Capital Gains Tax
Annual exemptions from Capital gains rises from £11,700 to £12,000 for 2019/20.
|As a basic rate taxpayer||Gains from other residential property||18%||18%|
|Gains from other chargeable assets||10%||10%|
|As a higher rate taxpayer||Gains from other residential property||28%||28%|
|Gains from other chargeable assets||20%||20%|
|Entrepreneurs’ Relief (the lifetime limit on relief is £10 million)|
The corporation tax rate remains at 19% for the year 2019/20
VAT Registration threshold
The VAT Registration threshold is the level of revenue at which you must register for VAT. It remains at £85,000 for 2019/20
General VAT rates
The standard rate of VAT remains at 20% for the year 2019/20
The reduced rate of VAT remains at 5% for the year 2019/20
Whether you’re an employee or a small business owner, it’s important to note the tax thresholds for the year so that you can make effective use of all of your allowances. If you still have questions about the changes affect you and your business, get in touch.