© 2019 A&J WEALTH MANAGEMENT LTD

A&J Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register, no 428590, at www.fca.org.uk/register
Registered in England, Company no: 5105933. Registered Head Office: Sawfords, Bigfrith Lane, Cookham Dean, Maidenhead, Berkshire SL6 9PH

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Tax Allowances

All of the rates below are shown for the current tax year 2019/20.

 

Keep on top of the game and download a copy of our quick tax guide so the information is

always at your fingertips using this PDF button.

Rates & Thresholds  

Basic rate - 20%

Higher rate - 40%

Additional rate - 45%

Taxable income above which Higher rate applies - £37,500

Taxable income above which Additional rate applies - £150,000


Dividend Ordinary rate - 7.5%

Dividend Higher rate - 32.5%

Dividend Additional rate - 38.1%

Dividend Allowance - £2,000

Personal Savings Allowance - £1,000


Total income limit to qualify for 0% savings interest tax rate - £16,500

 

*The dividend rates apply to the extent that dividend income exceeds the £2,000 dividend allowance; personal savings allowance is reduced to £500 for higher rate tax payers and nil for additional rate taxpayers.

 

Individual Allowances  

 

Personal allowance - £12,500

Income limit for personal allowance - £100,000

The personal allowance is reduced by £1 for every £2 of income above the income limit, so that those earning more than £123,000 receive no personal allowance at all.

 

Registered blind person's allowance - £2,450

Married couple's allowances:  

For those born before 6 April 1935 - £8,915*

Transferable personal allowance if born after 5 April 1935 - £1,250**


*Tax relief on this amount is restricted to 10%
**Subject to the recipient not being liable to tax above basic rate.

 

Capital Gains Tax

Standard rate - 10%

For higher & additional rate taxpayers - 20%

Rate for entrepreneurs relief - 10%

Individual allowance - £12,000

Allowance for most Trustees - £6,000

Lifetime allowance for entrepreneurs' relief - £10m

 

Inheritance Tax

Nil Rate Band - £325,000

Standard rate - 40%

Rate after reduction for charitable donations - 36%

At least 10% of the total estate must be given to charity by the estate to qualify for the reduction

Residence Nil Rate Band - £150,000

Applicable when giving your home away to your children or grandchildren.

This reduces if the net value of the estate is over £2m, by £1 for every £2 that the estate exceeds this value.

If you’re married and your estate is worth less than the £2m threshold, any unused allowance can be added to your partner’s allowance when you die. This means their threshold can be as much as £950,000.

However, if the net value of your estate exceeds £2m, the additional nil rate band will be reduced by £1 for every £2 by which the net value exceeds that amount.

Main Exemptions

Gifts to spouse (domiciled in the UK) - Unlimited

Annual exemption - £3,000

Small gifts - Unlimited up to £250

 
Gifts in consideration of marriage, made to:

A child - £5,000

    A grandchild or great-grandchild - £2,500

    Any other person - £1,000

Gifts to charity - Unlimited

 

Regular gifts from excess income may also be exempt from inheritance tax, subject to proof there is enough income available after the gift to maintain the giver's normal lifestyle. Such gifts include:

  • Christmas, birthday, wedding, civil partnership and anniversary presents

  • Life assurance policy premiums

  • Regular payments into savings plans

 

Lifetime transfers and potentially exempt transfers: Taper relief may be available to reduce the tax payable on non-exempt lifetime gifts made between 3- 7 years prior to death of the donor.

For more detailed information on inheritance tax and ideas to avoid liability, review our knowledge centre.

National Insurance

Standard earnings rate when earning over £166 per week (Class 1, employed) - 12%

Upper earnings rate when earning over £962 per week (Class 1, employed) - 2%

 
Self employed (Class 2 & 4):  

Flat rate when earnings are above £6,365 p.a. - £3.00 per week

On profits between £8,632 & £50,000 p.a. - 9%

On profits above £50,000 - 2%


Voluntary (Class 3) £15.00 - per week

Paid by those wishing to fill gaps in their contribution record, e.g. to top up their state pension

 

Savings & Pensions

Individual Savings Account (ISA) - £20,000

Junior ISA - £4,368

Help to Buy ISA - £3,000

Allows first time buyers to save up to £200pm and receive a 25% bonus (up to a maximum £3,000)


Pension Annual Allowance -£40,000

Money Purchase Annual Allowance - £4,000

Pension Fund Lifetime Allowance - £1,055,000


Tax relief is available on annual pension contributions of £3,600 or 100% of earnings, whichever is the higher, subject to the maximum contribution limits outlined above. If contributions exceed this level, you will be subject to an annual allowance tax charge on the excess.


Subject to conditions, certain 'small' pension funds (<£30,000) may be accessible without reducing the maximum annual contribution available.


Individuals affected by the reduction to £1m can apply for 'Fixed protection 2016' to preserve an entitlement to the higher £1.25m lifetime allowance provided (broadly) they do not accrue further pension benefits after this date. Individuals with total pension rights valued at greater than £1m as at 5 April 2016 can apply for ‘Individual protection 2016'.


From 6 April 2016, the normal annual allowance will be reduced by £1 for each £2 that an individual's 'adjusted income' exceeds £150k. This is subject to a minimum annual allowance of £10,000 for individual's with 'adjusted income of £210k or more. (Adjusted income can be defined as total income before tax from all sources including employer pension contributions)

Please note

The details on this page are based on our understanding of tax rates, allowances and HM Revenue & Custom's practices as at 6th April 2019.  The levels and value of tax benefits depend on your individual circumstances and are subject to change. The Financial Conduct Authority does not regulate tax advice.