Today brings the start of the 2020/21 tax year. We take a look at what’s staying the same and the changes coming into play.
National Insurance payments
The Chancellor used Budget 2020 to bring in a rise in the National Insurance Contribution thresholds. For both employed and self-employed workers, the threshold is now £9,500, up from £8,632. Any earnings above this will incur 12% NIC. That means that half of UK households will be £120 better off on average, according to the Institute for Fiscal Studies.
There is a 3.9% increase in the flat-rate state pension, bringing the yearly total to £9,110.40. For those on the old state pension, the increase brings payments up to £6,981 a year, not including top-ups.
This tax year sees an increase in the annual allowance. The threshold from which the annual allowance starts tapering off is now £240,000, a change that has been made in part to avoid penalising doctors for taking extra shifts.
The lifetime pension allowance rises with inflation to £1,073,100.
The yearly capital gains tax allowance rises to £12,300 – a £300 increase.
The personal allowance isn’t changing for this tax year. It remains at £12,500 for England, Scotland, and Northern Ireland.
England and Northern Ireland:
- Basic rate: 20% on annual earnings above the Pay As You Earn threshold up to £37,500
- Higher rate: 40% on annual earnings from £37,501 to £150,000
- Additional rate: 45% on annual earnings above £150,000
Scotland:
- Starter rate: 19% on annual earnings above the PAYE threshold up to £2,085
- Basic rate: 20% on annual earnings from £2,086 to £12,658
- Intermediate rate: 21% on annual earnings from £12,659 to £30,930
- Higher rate: 41% on annual earnings from £30,931 to £150,000
- Additional rate: 45% on annual earnings above £150,000
- Top rate: 46% on annual earnings above £150,000
Recent Scottish Parliamentary approval means that the above rates will not take effect until 10th May 2020.
Wales:
- Basic rate: 20% on annual earnings above the PAYE threshold up to £37,500
- Higher rate: 40% on annual earnings from £37,501 up to £150,000
- Additional rate: 45% on annual earnings above £150,000
BTCSoftware provides award-winning software that our customers love. For simple and straightforward tax and compliance work, try out BTCSoftware’s Solution Suite. Get in touch for your free, no-obligation demo on 0345 241 5030. You can find out more about the software here.
