Tax Rates 2019/2020

Tax Rates 2019/2020

Tax Rates 2019/20

We have summarised the key rates and allowances which are fundamental to our business and personal lives. We are sure that you will find them a useful point of reference and have set out below a few examples of how they can be used.

Personal tax rates

As the UK tax system becomes more devolved, it is important to keep abreast of the changes taking place in the Scottish and Welsh income tax rates and bands. We have summarised the relevant information together with the rates and allowances which apply to investment income.

Buying property

If you buy property then property taxes payable are different depending where the property is in the United Kingdom. Stamp Duty Land Tax is payable on property in England and Northern Ireland, whilst Land and Buildings Transaction Tax is payable on property in Scotland and Land Transaction Tax on property in Wales. Our tax rates highlight the main rates so that you can consider the potential cost of buying property.

Asset sales

If you sell an asset such as land, capital gains tax may be due. Our tax rates highlight the main rates and reliefs so that you can consider the tax bill that may arise.

Rates for businesses

If you run a business, obtaining the right allowances on equipment that your business buys can affect the tax that your business has to pay each year. The Annual Investment Allowance has increased from 1 January 2019 to £1,000,000 per annum. We have summarised the main allowances that are available.

Rates for employees

There are increases in the percentage charges for company car benefits again this year. Our guide explains how these are computed to help ensure that you are paying the correct amount of tax.

There are increases in the percentage charges for company car benefits again this year. Our guide explains how these are computed to help ensure that you are paying the correct amount of tax.

Rates that affect us all

Long term planning for a comfortable retirement can never start too early. Our tax rates explain how much can be contributed to an approved pension scheme each year tax efficiently.

Our tax rates contain the main inheritance tax rates and exemptions but early planning can mitigate these tremendously.


These rates are intended for use as a quick point of reference. Should you require any further information, have a simple question or require detailed advice we are only a phone call awa

 

Capital allowances - plant and machinery
  • The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
  • Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building (‘integral features’), computers, cars, vans and similar equipment used in a business.
  • There are special rules for cars and certain ‘environmentally friendly’ equipment.
  • Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
  • The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
  • Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.
  • Structures and Buildings Allowance is introduced from 29 October 2018 at a rate of 2% on a straight line basis.

AIA

  • Special rules apply to accounting periods straddling the dates shown in the tables below.
  • The AIA may need to be shared between certain businesses under common ownership.

AIA limits – companies

Expenditure incurred:

Annual limit

  £
From 1 January 2016 to 31 December 2018 200,000
From 1 January 2019 1,000,000

AIA limits – sole traders and partnerships

Expenditure incurred:

Annual limit

  £
From 1 January 2016 to 31 December 2018 200,000
From 1 January 2019 1,000,000

Other plant and machinery allowances

  • Expenditure upon which AIA is not given/claimed will obtain relief through the ‘main rate pool’ or the ‘special rate pool’ rather than each item being dealt with separately.
  • The annual rate of WDA is 18% in the ‘main rate pool’ and 6% in the ‘special rate pool’. The 8% WDA is reduced to 6% from April 2019. Special rules apply to accounting periods straddling this date.
  • A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

Cars

  • For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
  • AIA is not available on any car but a 100% first year allowance may be available on certain cars. To qualify for first year allowance, the car must be purchased new.

Cars acquired from April 2018

Emissions (g/km)

Pool

Allowance

≤50 Main rate 100% FYA
≤ 110 Main rate 18% WDA
>110 Special rate 6% WDA
Capital gains tax (CGT)
  • CGT is payable by individuals, trustees and personal representatives (PRs). Companies pay corporation tax on their capital gains.
  • There are annual tax-free allowances (the ‘annual exempt amount’) for individuals, trustees and PRs. Companies do not have an annual exempt amount.
  • For individuals, net gains are added to total taxable income to determine the appropriate rate of tax. The standard rate applies only to the net gains which, when added to total taxable income, do not exceed the basic rate band.
  • Gains which qualify for Entrepreneurs’ Relief or Investors’ Relief are charged at 10% for the first £10m of qualifying gains.

Rates and annual exemption 2019/20

Individuals 2019/20
  £
Exemption 12,000
Standard rate 10%
Higher rate 20%

The higher rate applies to higher rate and additional rate taxpayers.

Additionally, higher rates of 18% and 28% may apply to the disposal of certain residential property.

Trusts 2019/20
  £
Exemption 6,000
Rate 20%
Car benefits
  • The car benefit is calculated by multiplying the car’s list price, when new, by a percentage linked to the car’s CO2 emissions.
  • For diesel cars generally add a 4% supplement (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard). The overall maximum percentage is capped at 37%.
  • The list price includes accessories.
  • The list price is reduced for capital contributions made by the employee up to £5,000.
  • Special rules may apply to cars provided for disabled employees.
  • For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size.
CO2 emissions (g/km)
(round down to nearest 5g/km for values above 95)
% of car’s list price taxed
0-50 16
51 up to 75 19
76 up to 94 22
95 23
100 24
105 25
110 26
115 27
120 28
125 29
130 30
135 31
140 32
145 33
150 34
155 35
160 36
165 and above 37
Car fuel benefit
  • Car fuel benefit applies if an employee has the benefit of private fuel for a company car.
  • The benefit is calculated by applying the percentage used to calculate the car benefit by a ‘fuel charge multiplier’.
  • The charge is proportionately reduced if provision of private fuel ceases part way through the year. The fuel benefit is reduced to nil only if the employee pays for all private fuel.
Car fuel benefit 2019/20  
Fuel charge multiplier £24,100
Cars - advisory fuel rates for company cars
  • Advisory rates only apply where employers reimburse employees for business travel in a company car or require employees to repay the cost of fuel used for private travel in a company car.
  • If the rate paid per mile of business travel is no higher than the advisory rate for the particular engine size and fuel type of the car, HMRC will accept that there is no taxable profit and no Class 1 NIC liability.

The advisory fuel rates for journeys undertaken on or after 1 March 2019 are:

Engine size Petrol
1400cc or less 11p
1401cc – 2000cc 14p
Over 2000cc 21p
Engine size Diesel
1600cc or less 10p
1601cc – 2000cc 11p
Over 2000cc 13p
Engine size LPG
1400cc or less 7p
1401cc – 2000cc 8p
Over 2000cc 13p

Hybrid cars are treated as either petrol or diesel cars for this purpose.

Child Benefit
Child Benefit is receivable by a person responsible for each child until they reach 16, or 19 if they stay in education or training.If the person (or their spouse or partner) has ‘adjusted net income’ above £50,000 the person with the highest income has to pay some of the Child Benefit as a tax charge.

 

Where adjusted net income is more than £60,000 a year, the tax charge equals the Child Benefit received.

Rates – 2019/20 £ per week
Eldest/Only Child £20.70
Other Children £13.70
 
Corporation tax rates
  • Corporation tax rates are set for each Financial Year. A Financial Year runs from 1 April to the following 31 March.
  • If the accounting period of a company straddles the 31 March, the profits are apportioned on a time basis to each Financial Year.
  • The Northern Ireland Executive has committed to setting the rate of corporation tax at 12.5% when the Northern Ireland Executive demonstrates its finances are on a sustainable footing.
Year to 31.3.20 Rate %
All profits 19
Employee's Statutory Payments

Statutory pay

  • Payments may be required from an employer if an employee is not at work for a variety of reasons.
  • There are detailed conditions for an employee to qualify for any of these statutory payments.
  • Employees are only eligible for a statutory payment if they have sufficient average weekly earnings of at least the lower earnings limit.

Statutory Sick Pay

  • Payments may be required from an employer if an employee is too ill to work.
  • SSP is generally payable for a period up to 28 weeks.

Statutory Maternity Pay

  • Payments may be required from an employer when an employee takes time off to have a baby.
  • SMP is payable for a period up to 39 weeks.

Statutory Paternity Pay

  • Payments may be required from an employer when an employee takes time off during their partner’s Statutory Maternity Pay period.
  • Payment is for a period of either one or two complete weeks.

Shared Parental Pay

  • Payments may be required from an employer when an employee takes time off following the curtailment of the period of SMP by the mother.
  • Payment is for up to a maximum of 37 weeks and is dependent on the mother’s unused SMP period.

Statutory Adoption Pay

  • Payments may be required from an employer when an employee takes time off when they adopt a child.
  • Payment is for a period up to 39 weeks.
2019/20 Statutory pay rates –
average weekly earnings £118 or over
 
Statutory Sick Pay £94.25
Statutory Maternity Pay  
First six weeks 90% of weekly earnings
Next 33 weeks £148.68
Statutory Paternity Pay – 2 weeks £148.68
Statutory Adoption Pay – 39 weeks  
First six weeks 90% of weekly earnings
Next 33 weeks £148.68
Shared Parental Pay £148.68

With the exception of Statutory Sick Pay, statutory payments may
be payable at 90% average weekly earnings throughout the payment period
in certain circumstances. This applies where 90% weekly earnings
are less than the standard rate of £148.68.

Income tax allowance

A personal allowance gives an individual an annual amount of income free from income tax.

Income above the personal allowances is subject to income tax.

The personal allowance will be reduced if an individual’s ‘adjusted net income’ is above £100,000. The allowance is reduced by £1 for every £2 of income above £100,000.

An individual born before 6 April 1935 may be entitled to a married couple’s allowance but this is reduced if ‘adjusted net income’ is above the married couple’s allowance income limit (see table below).

Marriage allowance – 10% of the personal allowance may be transferable between certain spouses where neither pays tax above the basic rate. The Marriage allowance is not available to couples entitled to the Married Couple’s allowance.

Income tax personal allowances £
Personal Allowance 12,500
Marriage Allowance 1,250
Blind person’s allowance 2,450
Married couple’s allowance
Either partner born before 6 April 1935
 
– Maximum reduction in tax bill 891.50
– Minimum reduction in tax bill 345.00
Married couple’s allowance income limit
Reduce married couple’s allowance by £1 for every £2 of ‘adjusted net income’ above this limit
29,600
Income tax rates
  • Income tax applies to the amount of income after deduction of personal allowances.
  • Income is taxed in a specific order with savings and dividend income taxed last.
  • Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
  • The starting rate band is only applicable to savings income. The 0% rate is not available if the taxable amount of non-savings income exceeds the starting rate band.
  • The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.

Income tax rates 2019/20

Band of taxable income Rate Rate if dividends
£   % %
0 – 5,000 Starting rate for savings 0 N/A
0 – 37,500 Basic rate 20 7.5
37,501 – 150,000 Higher rate 40 32.5
Over 150,000 Additional rate 45 38.1
Special rates for savings and dividend income falling into above bands of taxable income
Savings Allowance
Basic rate taxpayers 1,000 0  
Higher rate taxpayers 500 0  
Additional rate taxpayers Nil N/A  
Dividend Allowance
for all taxpayers 2,000   0
Income tax rates - across the UK
  • Income tax applies to the amount of income after deduction of personal allowances.
  • Income is taxed in a specific order with savings and dividend income taxed last.
  • Dividend income and savings income falling within the dividend and savings allowances still form part of total income of an individual.
  • The starting rate band is only applicable to savings income. The 0% rate is not available if the taxable amount of non-savings income exceeds the starting rate band.
  • The Scottish Parliament set the rates of income tax and the limits at which these rates apply for Scottish residents on non-savings and non-dividend income.
  • Income tax is devolved to Wales from 6 April 2019 on non-savings and non-dividend income.

Income tax rates 2019/20

Band of taxable income Rate Rate if dividends
£   % %
0 – 5,000 Starting rate for savings 0 N/A
0 – 37,500 Basic rate 20 7.5
37,501 – 150,000 Higher rate 40 32.5
Over 150,000 Additional rate 45 38.1
Special rates for savings and dividend income falling into above bands of taxable income
Savings Allowance
Basic rate taxpayers 1,000 0  
Higher rate taxpayers 500 0  
Additional rate taxpayers Nil N/A  
Dividend Allowance
for all taxpayers 2,000   0
Income tax rates - Scotland
  • Scottish resident taxpayers are liable on non-savings and non-dividend income as set out below.
  • Savings income and dividend income are taxed using UK tax rates and bands.
Band of taxable income Rate
£   %
0 – 2,049 Starter rate 19
2,050 – 12,444 Basic rate 20
12,445 – 30,930 Intermediate rate 21
30,931 – 150,000 Higher rate 41
Over 150,000 Top rate 46
Income tax rates - Wales
  • Income tax is devolved to Wales from 6 April 2019.
  • Welsh resident taxpayers continue to pay the same overall income tax rates using the UK rates and bands.
  • The total rate of income tax = UK income tax + Welsh rate of income tax
  • Savings income and dividend income are taxed using UK tax rates and bands.
Band of taxable income UK Rate Welsh Rate Total Rate
£   % % %
0 – 37,500 Basic rate 10 10 20
37,501 – 150,000 Higher rate 30 10 40
Over 150,000 Additional rate 35 10 45
Individual Savings Account (ISA)

The income from ISA investments is exempt from income tax. Any capital gains made on investments held in an ISA are exempt from capital gains tax.

Savers are able to subscribe any amounts into a cash ISA, a stocks and shares ISA or an innovative finance ISA subject to not exceeding the overall annual investment limit.

Investors may transfer their investments from one kind of ISA to another.

A Help to Buy ISA provides a tax free savings account for first time buyers wishing to save for a home. The scheme provides a government bonus to each person who has saved into a Help to Buy ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings. The bonus will be paid in the form of a voucher when the first home is purchased. Conditions apply to the account holder and to the property purchased.

The Lifetime ISA is available for those aged between 18 and 40. Save up to £4,000 each year up until the age of 50, and receive a government bonus of 25% (a bonus of up to £1,000 a year). Savers can use some or all of the money to buy their first home, or keep it until they are aged 60 when the account can be accessed tax free. Conditions apply to the account holder and property purchased.  Penalties apply if funds are withdrawn in other circumstances.

ISA limits 2019/20  
Overall annual investment limit £20,000
Junior ISA annual investment limit £4,368
Help to Buy ISA monthly subscription limit (initial deposit limit £1,200) £200
Lifetime ISA annual investment limit £4,000
Inheritance tax (IHT)
  • IHT may be payable when an individual’s estate is worth more than the IHT nil rate band when they die.
  • Lifetime and death transfers between UK domiciled spouses are exempt from IHT.
  • For 2019/20, a further nil rate band of £150,000 (2018/19 – £125,000) may be available in relation to current or former residences.
  • The IHT threshold available on death may be increased for surviving spouses as there may have been a nil rate band not used, or not fully used, on the previous death.
  • There are reliefs for some business and farming assets which reduce their value for IHT purposes.
  • IHT may also be payable on gifts made in an individual’s lifetime but within seven years of death.
  • Some lifetime gifts are exempt.
  • Transfers of assets into trust made in an individual’s lifetime may be subject to an immediate charge but at lifetime rates.
  • There are also charges on some trusts.

IHT rates and nil rate band 2019/20 and 2018/19

IHT nil rate £325,000
Lifetime rate 20%
Death rate 40%
Death rate if sufficient charitable legacies made 36%

IHT reliefs for lifetime gifts

Annual exemption £3,000
Small gifts £250
Marriage  
– parent £5,000
– grandparent £2,500
– bride/groom £2,500
– other £1,000

IHT – reduced charge on gifts within seven years of death

Years before death % of death charge
0-3 100
3-4 80
4-5 60
5-6 40
6-7 20
Land and Buildings Transaction Tax

Land and Buildings Transaction Tax (LBTT) is payable on land and property transactions in Scotland.

LBTT (Residential property)

Consideration (£) Rate
0 – 145,000 0%
145,001 – 250,000 2%
250,001 – 325,000 5%
325,001 – 750,000 10%
750,001 and above 12%

The rates apply to the portion of the total value which falls within each band.

Residential rates may be increased by 4% (3% prior to 25 January 2019)  where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief raises the zero rate tax threshold for first-time buyers from £145,000 to £175,000.

LBTT (Non-residential)

Consideration (£) Rate
0 – 150,000 0%
150,001 – 250,000 1%
Over 250,000 5%

The rates apply to the portion of the total value which falls within each band. Different rates and bands applied prior to 25 January 2019.

Land Transaction Tax

Land Transaction Tax (LTT) is payable on land and property transactions in Wales.

LTT (Residential property)

Consideration (£) Rate
0 – 180,000 0%
180,001 – 250,000 3.5%
250,001 – 400,000 5%
400,001 – 750,000 7.5%
750,001 – 1,500,000 10%
1,500,000 and above 12%

The rates apply to the portion of the total value which falls within each band. Residential rates may be increased by 3% where further residential properties, costing over £40,000, are acquired.

LTT (Non-residential)

Consideration (£) Rate
0 – 150,000 0%
150,001 – 250,000 1%
250,001 – 1,000,000 5%
Over 1,000,000 6%

The rates apply to the portion of the total value which falls within each band.

Mileage Allowance Payments (MAPs) for employees
  • MAPs represent the maximum tax free mileage allowances an employee can receive from their employer for using their own vehicle for business journeys.
  • An employer is allowed to pay an employee a certain amount of MAPs each year without having to report payments to HMRC.
  • If the employee receives less than the statutory rate, tax relief can be claimed on the difference.

MAP rates per business mile 2019/20 and 2018/19

Cars and vans Rate per mile
Up to 10,000 miles 45p
Over 10,000 miles 25p
Bicycles 20p
Motorcycles 24p
Minimum Wage
  • National Minimum Wage rates apply to employees up to the age of 24.
  • National Living Wage rates apply to employees 25 and over.
  • The Apprentice rate applies to apprentices under 19, or 19 and over in the first year of apprenticeship.
  • Penalties apply to employers who fail to pay minimum wages.
Age 25+ 21-24 18-20 16-17 Apprentice
From 1 April 2019 £8.21 £7.70 £6.15 £4.35 £3.90
National Insurance contributions (NIC) - rates and allowances
  • Employees start paying Class 1 NIC from age 16 (if sufficient earnings).
  • Employers pay Class 1 NIC in accordance with the table below.
  • Employer NIC for employees under the age of 21 and apprentices under the age of 25 is reduced from the normal rate of 13.8% to 0% up to the Upper Secondary Threshold.
  • Employees’ Class 1 NIC stop when they reach their State Pension age. The employer’s contribution continues.

Employees – Class 1 – 2019/20

Earnings per week %
Up to £166 Nil
£166.01 – £962 12
Over £962 2

Entitlement to state pension and other contribution-based benefits is retained for earnings between £118 and £166 per week.

Employers – Class 1 – 2019/20

Earnings per week %
Up to £166 Nil
Over £166 13.8
Upper Secondary Threshold (for under 21s and apprentices under 25)
Up to £962
0%

Other National Insurance payable by employers

Class 1A – 13.8% on broadly all taxable benefits provided to employees

Class 1B – 13.8% on PAYE Settlement Agreements

Self-employed – Class 2 and 4

  • A self-employed person starts paying Class 2 and Class 4 NIC from 16 or over (if sufficient profits)
  • Class 2 NIC stop when a person reaches State Pension age
  • Class 4 NIC stop from the start of the tax year after the one in which the person reaches State Pension age.

Self-employed – Class 2 – 2019/20

Flat rate per week £3.00
Small Profits Threshold £6,365 per year

No Class 2 is due if the amount of trading profits assessable to income tax and Class 4 NIC is below this figure. However, a person might decide to carry on paying Class 2 voluntarily to accrue entitlement to the State Pension and entitlement to other benefits.  

Class 4 – 2019/20

Annual profits %
Up to £8,632 Nil
£8,632.01 – £50,000 9
Over £50,000 2

Class 3

  • A person needs 35 years (30 years if State Pension age is before 6 April 2016) of NIC to get a full State Pension.
  • Class 3 voluntary contributions can be paid to fill or avoid gaps in a NI record.

Class 3 – 2019/20

Flat rate per week £15.00

Pensions Automatic Enrolment

Auto enrolment places duties on employers to automatically enrol ‘workers’ into a work based pension scheme. Employers are required to automatically enrol all ‘eligible jobholders’ into a qualifying pension scheme and pay pension contributions on their behalf.

Phasing in of contributions

  Employer minimum contribution Total minimum contribution
6 April 2018 to 5 April 2019 2% 5%
6 April 2019 onwards 3% 8%

Where the employer does not make the total minimum contribution the employee is obliged to pay the balance.

  2019/20
Automatic enrolment earnings trigger £10,000
Qualifying earnings band – lower limit £6,136
Qualifying earnings band – upper limit £50,000
Pensions - tax relief on pension contributions
  • Tax relief available for personal contributions is the higher of £3,600 (gross) or 100% of relevant earnings.
  • Any contributions in excess of £40,000, whether personal or by the employer, may be subject to income tax on the individual.
  • The limit may be reduced to £4,000 once money purchase pensions are accessed.
  • Where the £40,000 limit is not fully used it may be possible to carry the unused amount forward for three years.
  • The annual allowance is tapered for those with adjusted income over £150,000. For every £2 of income over £150,000 an individual’s annual allowance will be reduced by £1, down to a minimum of £10,000.
  • Employers will obtain tax relief on employer contributions if they are paid and made ‘wholly and exclusively’ for the purposes of the business. The tax relief for large contributions may be spread over several years.

 

Property allowance
  • A property allowance is available to individuals.
  • The property allowance will not apply to partnership income or to income on which rent a room relief is given.
Income up to £1,000 Property income assessable NIL
Income over £1,000 Election to deduct £1,000 rather than the actual expenses
Self assessment - key dates

31 January 2019 – First payment on account due for 2018/19 tax year.

31 July 2019 – Second payment on account for 2018/19 tax year.

5 October 2019 – Deadline for notifying HMRC of new sources of income (including the Child Benefit charge) if no tax return has been issued for 2018/19 tax year.

31 October 2019 – Deadline for submission of 2018/19 non-electronic returns.

30 December 2019 – Deadline for submission of 2018/19 electronic tax returns if ‘coding out’ of any underpayment is required.

31 January 2020 – Deadline for filing electronic tax returns for 2018/19. Balancing payment due for 2018/19 tax year. First payment on account due for 2019/20 tax year.

Stamp Duty

When you buy shares, you usually pay a tax or duty of 0.5% on the transaction. If you buy shares electronically Stamp Duty Reserve Tax (SDRT) is payable. For shares purchased using a stock transfer form, you will pay Stamp Duty if the transaction is over £1,000.

Stamp Duty Land Tax (SDLT)
  • SDLT is payable on land and property transactions in England and Northern Ireland.
  • Property transactions in Scotland are subject to Land and Buildings Transaction Tax (LBTT).
  • Property transactions in Wales are subject to Land Transaction Tax (LTT).

Residential property

The rates apply to the portion of the total value which falls within each band.

Consideration (£) Rate
0 – 125,000 0%
125,001 – 250,000 2%
250,001 – 925,000 5%
925,001 – 1,500,000 10%
1,500,001 and above 12%

These rates may be increased by 3% where further residential properties, costing over £40,000, are acquired.

First-time Buyer relief

First-time buyers may be eligible for first-time buyer relief on purchases of residential property up to £500,000. The rates apply to the portion of the total value which falls within each band.

Consideration (£) Rate
0 – 300,000 0%
300,001 – 500,000 5%
for purchases over 500,000 normal rates apply

Non-residential SDLT rates

Consideration (£) Rate
0 – 150,000 0%
150,001 – 250,000 2%
Over 250,000 5%

Payable on consideration which falls in each band.

State Pensions
  • The basic State Pension is a regular payment from the government that an individual may be entitled to when they reach State Pension age.
  • The basic State Pension depends on the number of years an individual has paid National Insurance or has National Insurance credits, eg while unemployed or claiming certain benefits.
  • To receive the basic State Pension an individual must have paid or been credited with National Insurance contributions (NIC).
  • In 2016 the State Pension was reformed into a single-tier new State Pension. In order to benefit from the full amount the individual will need 35 years, rather than the previous 30 years of NIC or credits for the full amount, with pro-rating where 35 years is not achieved. You will usually need 10 qualifying years to get any State Pension. The amount an individual receives can be higher or lower depending on their National Insurance record. It will only be higher if you have over a certain amount of Additional State Pension.
  • Currently an individual may also be entitled to the Additional State Pension. How much an individual gets depends on the number of qualifying years of NIC, the amount of earnings and whether the individual has been contracted out of the scheme.
Weekly State Pension 2019/20  
Basic – single person £129.20
New State Pension £168.60
Tax reliefs for individuals

Enterprise Investment Scheme (EIS)

The Enterprise Investment Scheme (EIS) provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax (CGT) breaks for their investment and companies can use the relief to attract additional investment to develop their business. Individuals are entitled to relief on investments in certain unquoted trading companies through EIS. A junior version of EIS the SEIS is also available.

Maximum investment per annum £1,000,000
Additional investment limit where investing in knowledge-intensive companies £1,000,000
Income tax relief 30%
CGT treatment on disposal if held for 3 years Exempt

Capital gains from the disposal of other assets may be deferred by making an EIS investment.

Seed Enterprise Investment Scheme (SEIS)

The Seed Enterprise Investment Scheme (SEIS) provides tax relief for individuals prepared to invest in new and growing companies. Investors can obtain generous income tax and capital gains tax (CGT) breaks for their investment and companies can use the relief to attract additional investment to develop their business. SEIS is a junior version of EIS.

Maximum investment per annum £100,000
Income tax relief 50%
CGT treatment on disposal if held for 3 years Exempt

An individual who makes a capital gain on another asset and uses the amount of the gain to make a SEIS investment will not pay tax on 50% of the gain (subject to certain conditions).

Social Investment Relief (SIR)

Social Investment Relief (SIR) is designed to encourage private individuals to invest in social enterprises including charities. Individuals are entitled to relief on their investment:

Maximum investment per annum £1,000,000
Income tax relief 30%
CGT treatment on disposal if held for 3 years Exempt

Capital gains from the disposal of other assets may be deferred by making a SIR investment.

(All reliefs are subject to detailed conditions being met.)

Venture Capital Trusts (VCTs)

Venture Capital Trusts (VCTs) are designed to encourage private individuals to invest in smaller high-risk unquoted trading companies. VCTs operate by indirect investment through a mediated fund. In effect they are very like the investment trusts that are obtainable on the stock exchange, albeit in a high-risk environment. Individuals are entitled to relief on investments in VCTs.

Maximum investment per annum £200,000
Income tax relief 30%
Dividend income Exempt
Capital gains treatment on disposal Exempt
Trade allowance

 

  • A Trade Allowance is available to individuals.
  • There is an equivalent rule for certain miscellaneous income. This will apply to the extent that the £1,000 trading allowance is not used against trading income.
  • The trade allowance is not available against partnership income.
Income up to £1,000 Profits assessable NIL
Income over £1,000 Election to deduct £1,000 allowance rather than the actual expenses

 

Van benefit
  • Van benefit is chargeable if the van is available for an employee’s private use.
  • A fuel benefit may also be chargeable if an employee has the benefit of private fuel paid for in respect of a company van.
  • The charges do not apply to vans if a ‘restricted private use condition’ is met throughout the year.
  • A reduced benefit charge may apply to vans which cannot emit CO2 when driven.
Van benefits 2019/20
Van benefit £3,430
Fuel benefit £655
VAT
  • Registered businesses charge VAT on their sales. This is known as output VAT and the sales are referred to as outputs.
  • Similarly VAT is charged on most goods and services purchased by the business. This is known as input VAT.
  • There are three rates: standard which applies to most goods and services, reduced rate for some goods and services such as home energy and zero rate goods and services, for example, most food and children’s clothes.
  • Some supplies are exempt from VAT for example postage stamps, financial and insurance transactions.
  • A business is required to register for VAT if the value of taxable supplies exceeds the annual registration limit.
  • The government has frozen the VAT registration and deregistration limits for two years from 1 April 2018.
VAT – rates and limits 2019/20  
Standard rate 20%
Reduced rate 5%
Annual Registration Limit
– from 1.4.19 – 31.3.20
£85,000
Annual Deregistration Limit
VAT fuel scale charges
Businesses must use these new VAT fuel scale charges from the start of their next prescribed accounting period beginning on or after 1 May 2018.

Rates will be updated once they are available.

CO2
band
Gross monthly
£
VAT
£
Net
£
120 or less 46 7.67 38.33
125 70 11.67 58.33
130 74 12.33 61.67
135 79 13.17 65.83
140 84 14.00 70.00
145 88 14.67 73.33
150 93 15.50 77.50
155 98 16.33 81.67
160 102 17.00 85.00
165 107 17.83 89.17
170 111 18.50 92.50
175 116 19.33 96.67
180 121 20.17 100.83
185 125 20.83 104.17
190 130 21.67 108.33
195 135 22.50 112.50
200 140 23.33 116.67
205 145 24.17 120.83
210 149 24.83 124.17
215 154 25.67 128.33
220 159 26.50 132.50
225 or more 163 27.17 135.83
CO 2
band
Gross 3 month period £ VAT
£
Net
£
120 or less 140 23.33 116.67
125 210 35.00 175.00
130 224 37.33 186.67
135 238 39.67 198.33
140 252 42.00 210.00
145 266 44.33 221.67
150 280 46.67 233.33
155 295 49.17 245.83
160 309 51.50 257.50
165 323 53.83 269.17
170 336 56.00 280.00
175 351 58.50 292.50
180 365 60.83 304.17
185 379 63.17 315.83
190 393 65.50 327.50
195 407 67.83 339.17
200 421 70.17 350.83
205 436 72.67 363.33
210 449 74.83 374.17
215 463 77.17 385.83
220 477 79.50 397.50
225 or more 491 81.83 409.17
CO 2
band
Annual gross
£
VAT
£
Net
£
120 or less 562 93.67 468.33
125 842 140.33 701.67
130 900 150.00 750.00
135 954 159.00 795.00
140 1,013 168.83 844.17
145 1,067 177.83 889.17
150 1,125 187.50 937.50
155 1,179 196.50 982.50
160 1,238 206.33 1,031.67
165 1,292 215.33 1,076.67
170 1,350 225.00 1,125.00
175 1,404 234.00 1,170.00
180 1,463 243.83 1,219.17
185 1,517 252.83 1,264.17
190 1,575 262.50 1,312.50
195 1,630 271.67 1,358.33
200 1,688 281.33 1,406.67
205 1,742 290.33 1,451.67
210 1,801 300.17 1,500.83
215 1,855 309.17 1,545.83
220 1,913 318.83 1,594.17
225 or more 1,967 327.83 1,639.17

Where the CO2 emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge.

For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used.

For cars which are too old to have a CO2 emissions figure, you should identify the CO2 band based on engine size. If its cylinder capacity is:

  • If its cylinder capacity is 1,400cc or less, use CO2 band 140
  • If its cylinder capacity exceeds 1,400cc but does not exceed 2,000cc, use CO2 band 175;
  • If its cylinder capacity exceeds 2,000cc, use CO2 band 225 or above.
Vehicle Excise Duty (VED) - passenger cars

For vehicles first registered on or after 1 April 2017, the VED or ‘Road Tax’ rate for the first 12 months is based on CO2 emissions shown on the V5 (Registration Document).

Subsequent years are charged at the standard rate. Cars with a list price of over £40,000 when new pay an additional rate of £320 per year on top of the standard rate, for 5 years.

New diesel vehicles registered after 1 April 2018 that do not meet the Euro 6d emissions standard are charged a supplement on their First Year Rate to the effect of moving up by one VED band.

VED bands and rates for cars first registered on or after 1 April 2017

CO2 emissions (g/km) Standard rate First year rate
0 £0 £0
1-50 £145 £10
51-75 £145 £25
76-90 £145 £110
91-100 £145 £130
101-110 £145 £150
111-130 £145 £170
131-150 £145 £210
151-170 £145 £530
171-190 £145 £855
191-225 £145 £1280
226-255 £145 £1815
Over 255 £145 £2135

VED bands and rates for cars registered on or after 1 March 2001 but before 1 April 2017

VED band CO 2 emissions (g/km) Standard rate
A Up to 100 £0
B 101-110 £20
C 111-120 £30
D 121-130 £125
E 131-140 £145
F 141-150 £160
G 151-165 £200
H 166-175 £235
I 176-185 £260
J 186-200 £300
K 201-225* £325
L 226-255 £555
M Over 255 £570

*Including cars emitting over 225g/km registered before 23 March 2006.

Disclaimer

This article is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.

Freight Transport Report: 2019

Freight Transport Report: 2019

On 12 February the Government Office for Science released a report looking at the UK Freight Transport System.

The objective of this study was to provide an evidence based review of the current landscape of the freight transport system in the UK and to provide some views on how this system may develop over the next decade.

The report looked at a wide range of areas of the sector including the following:

  • What is freight transport and who are the key stakeholders in the sector?
  • What affects freight transport demand?
  • Who provides freight transport services?
  • The strategic freight infrastructure network
  • What is the future of freight?

Whilst the main focus of the study was to provide a synopsis of the current state of the sector, it is the last section of the report that potentially is of the most use to those involved in lifting freight and their suppliers.

The key challenges for the freight sector in the next 10 years were identified as:

  • How can the freight transport system become more cost effective and add to the overall productiveness of the economy?
  • How can the freight transport system improve in terms of its impact on local air quality and emissions?
  • How can the use of net work infrastructure be made more efficient with a view to reducing congestion?
  • How will the freight transport system need to adapt to the changing trading relationship with the EU?
  • How can the planning system cater for the future needs of the freight transport system?
  • How can the freight transport system best adapt to changes in consumer demand, manufacturing practices and technology whilst providing a reasonably stable environment for the private sector?

A continued desire to reduce the emissions of environmental pollutants both from road and rail transport featured large in the report’s observations. Trends and measure envisaged include regulating access to urban areas by the most polluting freight vehicles, greater use of ultra low emissions vehicles such as electric vehicles, the development of ‘edge of town’ freight consolidation centres to facilitate transfer of goods to a lower polluting form of transport for final delivery in urban areas, the phasing out of diesel only traction on the railways by 2040, and the use of shore based electrical supplies for shipping whilst sat in port as opposed to diesel generated electric.

It was also observed that whilst there may a be a greater take up of Light Goods Vehicles powered by alternative fuel sources for short distance freight flows, current technology prevented this from being a viable proposition for longer haul freight.

The changing dynamics of how consumers purchase goods is also envisaged to have an impact on the sector with the continued rise of e-commerce. This is anticipated to see a reduction in private car journeys to retail outlets and this being substituted by more ‘white van’ deliveries. This will also have an effect on the average freight unit size which is expected to reduce. Distribution centres may need to invest heavily in automated picking and packing procedures to respond to these changes.

The anecdotal trend to reshore manufacturing away from relatively low cost locations such as China is also noted which along with a possible increase in protectionism is anticipated to shorten supply chains in coming years.

For road haulage, the possible advent of ‘platoons’ of HGVs travelling along strategic corridors is highlighted which, without technological development may be restricted to the motorway network.

Overall the next decade could see the emergence of a very different freight transport system to the one we see today

Paul Wormald, partner at Hawsons commented “the government have produced a very thorough review of the Freight Transport System. Whilst the bulk of the report looks at the current and historic landscape, the really interesting points are held within their view of the future. This gives a valuable insight into where government policy may be heading which can help businesses in this sector plan for the future.

It is good that the government recognises the need to provide a stable environment for what is a private sector dominated area, but they need to back that up with policies that encourage investment and innovation to allow businesses to respond to the challenges of the future.

Taxation measures such as the increase in the annual investment allowance and the research and development tax credit scheme need to be retained and extended so that issues such as the use of alternative fuels, development of new working practices, and investment in new plant and equipment can be realised.

At Hawsons we help our clients in this sector by utilising these valuable tax measures to their best effect”

 

 

 

 

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Paul Wormald

Partner, Doncaster

01302 367 262

[email protected]

Free initial meeting

How will the VAT reverse charge for construction work?

How will the VAT reverse charge for construction work?

A domestic reverse charge will be introduced from 1 October 2019 to tackle VAT fraud in the construction industry. Tony Nickson, VAT Consultant at Hawsons, explains what this will mean for businesses.

What is a reverse charge?

In a nutshell the reverse charge is where the customer charges themselves VAT, rather than the supplier charging VAT. This means there is no opportunity for the supplier to disappear without paying the VAT to HMRC.

When will this come into effect?

1 October 2019

Who will be affected?

Businesses involved in buying or selling specific construction services.

What types of construction services will be covered by the reverse charge?

The domestic reverse charge will only affect supplies at the standard or reduced rates where payments are required to be reported through the Construction Industry Scheme (CIS).

Therefore supplies between sub-contractors and contractors, as defined by CIS, will be subject to the reverse charge.

What supplies are excluded from the reverse charge?

It will not apply where:

  • Services are applied to the end user, such as the property owner, or directly to a main contractor who sells a newly completed building to the customer
  • The recipient makes onward supplies of those construction services to a connected company
  • The supplier and recipient are landlord and tenant or vice versa, or
  • The supplies are zero-rated.

The Government’s original proposal stated that the reverse charge would apply to ‘labour only’ supplies of construction services. However, HMRC’s latest publications state that it will also cover the provision of construction services that include materials. This will bring many more construction businesses into the reverse charge than first thought.

How will it work?

The introduction of a reverse charge will not change the liability of the supply of the specified services. It will just change the way in which the VAT on those supplies is accounted for- rather than the supplier charging and accounting for the VAT, the recipient of those supplies will account for the VAT. Only supplies made on, or after 1 October 2019 will apply. This will include goods supplied with those services.

How should contractors prepare for the change?

Businesses that supply construction services should identify instances where they supply services to other businesses in the construction sector (rather than to a consumer of those services) and determine whether the services are included within the list of specified service. Businesses that are caught by this will from October 2019 no longer need to charge VAT on these services as the recipient will charge themselves VAT.

Implementation of the reverse charge

HMRC understands the difficulties businesses may have in implementing the domestic reverse charge and will apply a light touch in dealing with related errors that occur in the first 6 months after introduction, where businesses are trying to comply with the new legislation.

However, businesses that knowingly claim end user status when the domestic reverse charge should have applied will still be liable for the output tax that should have been paid and may be liable for penalties.

 How Hawsons can help

If you have any concerns relating to the introduction of the reverse charge or any other aspect of your VAT affairs, please get in touch with Tony Nickson or your usual Hawsons contact.

 

Tony Nickson is a VAT Consultant at the firm. He provides practical VAT advice to a wide range of clients in numerous business sectors and advises on matters relating to sole proprietors, partnerships and corporate bodies on all VAT issues including exporting, importing or providing goods/services within the UK. Please contact Tony on [email protected] or 0114 266 7141.

Free initial meeting

State-backed indemnity scheme launched to save GPs thousands.

State-backed indemnity scheme launched to save GPs thousands.

From 1 April 2019, GPs will pay 80-90% less for their medico-legal cover due to a new state-backed indemnity scheme.  The scheme for GPs will cover all future clinical negligence claims for NHS work, however GPs will still need to maintain cover for work that falls outside of the scheme, such as private practice work.

Medical Defence Organisations (MDOs) have confirmed that GPs who are currently part way through an annual indemnity package may be eligible for a refund when the state-backed scheme is implemented in April, which could lead to substantial refunds being issues to practitioners.

When the state-backed indemnity takes effect, it is estimated that some GP members will be paying only 10% of what their previous year fees were. The Medical Protection Society (MPS) stated that GPs working eight sessions can expect their subscription to be less than £800 compared with the estimate last year of £8,000. The former health secretary, Jeremy Hunt, recognised that GPs were being forced out of the profession as a result on the rising fees when he first announced the plans for the state-backed GP indemnity in 2017.

The exact fee will reflect individual circumstances and the level of cover that is required for the services each GP provides. The new personalised subscription rates will be sent to GP members and will depend on factors including the amount of private work they undertake and the number of sessions they work. The subscription will include 24-hour advice and support with medico-legal issues from their NHS and private work.

A spokesperson from the Medical Defence Union (MDU) said: “NHS GP members working in England and Wales can expect to benefit from very significantly reduced subscriptions with the introduction of state-indemnity for NHS claims, even compared to the MDU’s previous transitional benefits rates which were themselves around 50% below our previous occurrence rates. Our new subscriptions are generally over 80% lower than the subscriptions in place in 2017 when state indemnity was announced.”

More from our GP practice experts

You can find all of our latest GP practice sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Hawsons year end tax planning ideas 2019

Hawsons year end tax planning ideas 2019

The tax system is undoubtedly complex, but this complexity shouldn’t deter you from keeping your taxes as low as possible, as well as maximising your net income. In this article, we look at pre 5th April tax planning opportunities that are available to avoid any unnecessary extra tax.

Please note, everyone’s tax situation is different, so the areas we talk about may not be applicable to you or your situation. If any of these areas interest you, please contact us and we will happily discuss them further with you.

Tax-Relievable pension contributions

Before 5th April 2019, you should consider making full use of the Annual Allowance. The Annual Allowance for making tax-relievable pension contributions is currently £40,000 for individuals with earnings below £150,000. This is then tapered down to £10,000 for individuals earning over £210,000. However, it is possible to carry forward unused Annual Allowances from the previous three tax years, so with a little planning, it may be possible to receive tax relief in the current tax year on contribution well in excess of £40,000.

Tax-Favourable investments

Individual Savings Accounts (ISAs), Seed Enterprise Investment Schemes (SEIS), Enterprise Investment Schemes (EIS) and Venture Capital Trusts (VCT) are classed as ‘tax-favourable investments’ and should be considered. Up to £20,000 per person and up to £40,000 for a married couple can be invested into an ISA during the 2018/19 year.

Personal allowance

For the tax year ending 5th April 2019, annual income of less than £11,850 is not liable to tax, so it is important that each spouse uses their full Personal Allowance for income tax purposes. It should be considered for civil partners and married couples to transfer income producing assets to ensure that personal allowances are not going to waste. There is also the ability to transfer a proportion of the Personal Allowance to your spouse if certain conditions are met.

Personal allowance for high earners

For every £2 that your adjusted net income is above £100,000, your Personal Allowance will go down by £1. If your income is £123,700 or more, your allowance is zero. If you have income that falls within this band, the effective rate of tax is 60%. Pre tax year end planning such as pension contributions or gift aid donations, can help reduce taxable income so that the maximum tax relief can be obtained.

Inheritance tax

Gifts up to £3,000 per annum are exempt from inheritance tax (IHT), there are additional exemptions for gifts in consideration of marriage. Regular gifts out of income can also be exempt from IHT. You should ensure these exemptions are reviewed on a regular basis, especially in the lead up to tax year end.

Capital gains tax

If an individual sells an asset (such as property or shares), they will pay capital gains tax (CGT) on any gain in excess of the annual exemption, which is currently set at £11,700 for the tax year ended 5th April 2019. However, as both spouses have their own CGT exemption, with careful planning assets can be transferred so that effectively a couple can realise gains of £23,400 before CGT is payable.

Usually when an asset is transferred from one owner to another this can potentially trigger a CGT liability; however this does not normally apply when switching ownership between spouses or civil partners. By transferring assets between spouses, it can be possible to make use of a spouse’s lower tax rate or unused annual exemption.  It is important that tax advice is sought prior to any asset transfer or sale as there are pitfalls to avoid and there may be reporting requirements.

Company dividends

For company shareholders, the dividend rules allow the first £2,000 to be taxed at 0%, irrespective of what tax band you fall into. A pre year end dividend should be considered if this 0% band hasn’t yet been maximised. Furthermore, by transferring shares to your spouse and paying them a year end dividend, you could double the £2,000 0% tax band.

 

 

Craig Walker is a senior tax manager at the firm. He advises on all matters tax related, both corporate and personal, including income, capital gains and inheritance. For more details and advice, please contact Craig on [email protected] or 0114 266 7141.