INCOME TAX ALLOWANCES

2019/2020
£

2020/2021
£

Personal allowance (1)

12,500

12,500

Income limit for personal allowance (1)

100,000

100,000

Income limit for married couples allowance (2)

29,600

30,200

Married couple’s allowance (2):

Maximum amount of married couple’s allowance (people born before 6 April 1935)

8,915

9,075

Minimum amount of married couple’s allowance

3,450

3,510

Marriage allowance (3)

1,250

1,250

Blind person’s allowance

2,450

2,500

Dividend allowance (4)

2,000

2,000

Personal savings allowance (5):

Basic rate taxpayers

1,000

1,000

Higher rate taxpayers

500

500

Property allowance (6)

1,000

1,000

Trading allowance (6)

1,000

1,000

INCOME TAX RATES AND TAXABLE BANDS

2019/2020
£

2020/2021
£

Starting rate for savings: 0%*

0–5,000

0–5,000

Basic rate: 20%

0–37,500

0–37,500

Higher rate: 40%

37,501–150,000

37,501–150,000

Additional rate: 45%

Over 150,000

Over 150,000

* There is a starting rate for savings income only. If non-savings income is above this limit then the starting rate for savings will not apply.

The dividend rate is the 7.5% ordinary rate (2019–20: 7.5%) and the 32.5% dividend upper rate (2019–20: 32.5%). In addition to these rates, there is a dividend additional rate of 38.1% (2019–20: 38.1%).

INHERITANCE TAX THRESHOLDS

2019/2020

2020/2021

Nil rate band

£325,000

£325,000

Residence nil rate band

£150,000

£175,000

*Scotland and Wales may diverge from the remainder of the UK in some respects.
(1) All individuals are entitled to the same personal allowance, regardless of the individuals’ date of birth. This allowance is subject to the £100,000 income limit which applies regardless of the individual’s date of birth. The individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit.
(2) This age-related allowance is reduced by £1 for every £2 of income over the limit until it reaches its minimum level.
(3) This transferable allowance is available to married couples and civil partners who are not in receipt of married couple’s allowance. A spouse or civil partner who is not liable to income tax; or not liable at the higher or additional rate, can claim to transfer this amount of their personal allowance to their spouse or civil partner. The recipient must not be liable to income tax at the higher or additional rates.
(4) The Dividend Allowance means that individuals will not have to pay tax on the first £2,000 (2019–20: £2,000) of dividend income they receive.
(5) The Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 (2019–20 £1,000) of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 (2019–20 £500) of savings income.
(6) The first £1,000 (2019–20 £1,000) of trading income is not subject to income tax, where the trading allowance is claimed. The trading allowance also applies to certain miscellaneous income from providing assets or services. A £1,000 (2019–20 £1,000) allowance is also available for property income, where claimed.