Income Tax Rates and Bands

Income Tax Rates and Bands

The income tax rates and bands have been announced as:

2020/21 2019/20
Personal Allowance 0%: 0 - £12,500 0 - £12,500
Basic rate: 20% £12,501 to £50,000 £12,501 to £50,000
Higher rate: 40% £50,001 to £150,000 £50,001 to £150,000
Additional rate: 45% Over 150,000 Over 150,000

When the personal allowance is taken into account an individual will start to pay tax at 40% when their total income exceeds £50,001. This threshold (and the 45% threshold) can be increased if the taxpayer pays personal pension contributions or makes gift aid donations.

Pensions

2020/21 2019/20
Lifetime allowance 1073100 1055000
Money purchase annual allowance 4000 4000
Annual Allowance 40000 40000

Annual allowance charge on excess is at appplicable tax rate(s) on earnings

Lifetime allowance charge if excess is drawn as cash 55%; as income 25% Pension commencement lump sum up to 25% pension benefit value

*Reduced by £1 for every £2 of adjusted income over £240,000(£150,000 for 19/20) to a minimum of £4,000 (£10,000 for 19/20), subject to threshold income being over £200,000(£110,000 for 19/20).
Annual Weekly
New state pension - where stae pension age reached after 05/04/2016 9110.4 175.2
Basic state pension - single person* 6981 134.25
Basic state pension - spouse/civil partner* 4183.4 80.45
*State pension age reached before 6/4/2016

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Exel accountants is an accountancy firm based in Watford Hertfordshire. Exel accountants are a firm of qualified and experienced accountants specialising in providing accounting and taxation services to new and established businesses.

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Exel Accountancy Ltd
31 The metro Centre,
Dwight Road,
Watford, WD18 9SB
0192 351 7300
info@exelaccountancy.co.uk
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