With effect from 6 April 2020 there has been an increase in some of the National Insurance thresholds compared to the 2019 – 2020 figures. There has been no change to the Income Tax thresholds or rates in the UK for this tax year.
The following Income Tax and National Insurance thresholds and rates will apply from 6 April 2020 to 5 April 2021:-
Income Tax Thresholds & Rates
England and Northern Ireland:-
| PAYE Tax Rates and Thresholds | 2020-2021 |
|---|---|
| Employee personal allowance | £240 per week £1,042 per month £12,500 per year |
| English and Northern Irish basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,500 |
| English and Northern Irish higher tax rate | 40% on annual earnings from £37,501 to £150,000 |
| English and Northern Irish additional tax rate | 45% on annual earnings above £150,000 |
Scotland:-
| PAYE Tax Rates and Thresholds | 2020-2021 |
|---|---|
| Employee personal allowance | £240 per week £1,042 per month £12,500 per year |
| Scottish starter tax rate | 19% on annual earnings above the PAYE tax threshold and up to £2,049 |
| Scottish basic tax rate | 20% on annual earnings from £2,050 to £12,444 |
| Scottish intermediate tax rate | 21% on annual earnings from £12,445 to £30,930 |
| Scottish higher tax rate | 41% on annual earnings from £30,931 to £150,000 |
| Scottish top tax rate | 46% on annual earnings above £150,000 |
Wales:-
| PAYE Tax Rates and Thresholds | 2020-2021 |
|---|---|
| Employee personal allowance | £240 per week £1,042 per month £12,500 per year |
| Welsh basic tax rate | 20% on annual earnings above the PAYE tax threshold and up to £37,500 |
| Welsh higher tax rate | 40% on annual earnings from £37,501 to £150,000 |
| Welsh additional tax rate | 45% on annual earnings above £150,000 |
Class 1 NIC Thresholds 2020-2021
| Class 1 National Insurance thresholds | per week | per month | per year |
|---|---|---|---|
| LEL | £120 | £520 | £6,240 |
| Primary Threshold (PT) | £183 | £792 | £9,500 |
| Secondary Threshold (ST) | £169 | £732 | £8,788 |
| Upper Secondary Threshold (under 21) (UST) | £962 | £4,167 | £50,000 |
| Apprentice Upper Secondary Threshold (apprentice under 25) (AUST) | £962 | £4,167 | £50,000 |
| Upper Earnings Limit (UEL) | £962 | £4,167 | £50,000 |
Note, Employees pay National Insurance Contributions on earnings above the Primary Threshold. Employers pay National Insurance Contributions on salary payments above the Secondary Threshold.
Dividend Tax Rates 2020-2021
There is no change to dividend tax rates in the 2020 – 2021 tax year:-
- The tax-free dividend allowance remains at £2,000.
- Basic-rate taxpayers pay 7.5% on dividends.
- Higher-rate taxpayers pay 32.5% on dividends.
- Additional-rate taxpayers pay 38.1% on dividends.
Business Mileage Allowances
There has been no change to HMRC’s approved mileage allowance payments which remain as follows:-
| First 10,000 Miles | Over 10,000 Miles | |
| Car / Van | £0.45 | £0.25 |
| Motorcycle | £0.24 | £0.24 |
| Bicycle | £0.20 | £0.20 |
You can download our handy Excel spreadsheet to keep a record of your business mileage by clicking on the download button below.
