Income Tax Rates and Bands Exel Accountancy in Watford

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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