Millward, May & Co - Wokingham Accountants
Wokingham Accountants

Tax Rates, Thresholds & Allowances

Tax Rates, Thresholds & Allowances

The UK has many different tax rates affecting both individuals and businesses – and as a business owner, you’ll be affected by many of them.

As well as the actual tax rates, your finances could be affected by the shifting of tax bands and allowances – working out your income can be very tricky.

Tax rates and thresholds for the 2018/19 and 2019/20 tax years are shown below.


Personal Allowance

The amount of salary you can take tax-free every year

  • In 2018/19 the personal allowance will be £11,850.

  • In 2019/20 the personal allowance will be £12,500.


Personal Allowance Income Limit - £100k

Your personal allowance (i.e. the money you can earn tax free) is reduced once you earn over £100,000. For each £2 in earnings above £100,000, you lose £1 of Personal Allowance

  • In 2018/19, you don’t receive any personal allowance when you earn over £123,700 (i.e. £100,000 + £11,850 x 2)

  • In 2019/20, you don’t receive any personal allowance when you earn over £125,000 (i.e. £100,000 + £12,500 x 2)


Income Tax

The rates your income will be taxed at (not including the personal allowance)

Basic rate - the lowest level of income tax.:

  • In 2018/19 basic rate income tax will be 20% on earnings up to £34,500.

  • In 2019/20 basic rate income tax will be 20% on earnings up to £37,500.

Higher rate - the middle ground of income tax:

  • In 2018/19 higher rate income tax will be 40% on earnings above the basic rate up to £150,000.

  • In 2019/20 higher rate income tax will be 40% on earnings above the basic rate up to £150,000.

Additional rate - the highest level of income tax:

  • In 2018/19 additional rate income tax will be 45% on all earnings over £150,000.

  • In 2019/20 additional rate income tax will be 45% on all earnings over £150,000.


Dividend Tax

The rates your dividend income will be taxes at (not including the personal allowance)

Dividend tax-free allowance - tax free allowance:

  • In 2018/19 the dividend tax free allowance will be £2,000.

  • In 2019/20 the dividend tax free allowance will be £2,000.

Dividend ordinary rate - the lowest level of dividend tax:

  • In 2018/19 the dividend ordinary rate will be 7.5% on earnings up to £34,500.

  • In 2019/20 the dividend ordinary rate will be 7.5% on earnings up to £37,500.

Dividend upper rate - the middle ground of dividend tax:

  • In 2018/19 the dividend upper rate will be 32.5% on earnings above the basic rate up to £150,000.

  • In 2019/20 the dividend upper rate will be 32.5% on earnings above the basic rate up to £150,000.

Dividend additional rate - the highest level of dividend tax:

  • In 2018/19 the dividend upper rate will be 38.1% on earnings above £150,000.

  • In 2019/20 the dividend upper rate will be 38.1% on earnings above £150,000.


Personal Savings Allowance

The amount of interest you can receive tax-free

  • If you are a basic rate taxpayer - your savings allowance is £1,000.

  • If you are a higher rate taxpayer - your savings allowance is £500.

  • If you are a additional rate taxpayer - your savings allowance is £0.


Employer National Insurance Contributions

The amount employers will need to pay towards employee’s National Insurance

2018/19:

  • The Employers National Insurance will be 0% up to £8,424.

  • The Employers National Insurance will be 13.8% of earnings over £8,424.

2019/20:

  • The Employers National Insurance will be 0% up to £8,632.

  • The Employers National Insurance will be 13.8% of earnings over £8,632.


Employee National Insurance Contributions

The amount employers will need to deduct from employee’ pay for National Insurance

2018/19:

  • The Employees National Insurance will be 0% of earnings up to £8,424 (£162 a week).

  • The Employees National Insurance will be 12% of earnings over £8,424 and up to £46,384 (£892 a week).

  • The Employees National Insurance will be 2% of earnings over £46,384 (£892 a week).

2019/20:

  • The Employees National Insurance will be 0% up to £8,632 (£166 a week).

  • The Employees National Insurance will be 12% of earnings over £8,632 and up to £50,024 (£962 a week).

  • The Employees National Insurance will be 2% of earnings over £50,024 (£962 a week).


Capital Gains Tax

Capital Gains Tax is a form of tax that is applied to the profit made when you sell an asset that has increased in value. It is the gain that is taxed, not the amount you sold it for

Annual exemption:

  • In 2018/19 the annual exemption for Capital Gains Tax will be £11,700.

  • In 2019/20 the annual exemption for Capital Gains Tax will be £12,000.

Capital Gains Tax on residential property:

  • If you are a basic rate taxpayer you will pay Capital Gains Tax of 18% on gains from residential property.

  • If you are a higher rate taxpayer you will pay Capital Gains Tax of 28% on gains from residential property.

Capital Gains Tax on other chargeable assets:

  • If you are a basic rate taxpayer you will pay Capital Gains Tax of 10% on gains from other chargeable assets.

  • If you are a higher rate taxpayer you will pay Capital Gains Tax of 20% on gains from other chargeable assets.


Vat Registration Threshold

The level of income at which you have to register for VAT. The threshold is based on your VAT taxable turnover (the total value of everything you sell or supply that isn’t VAT exempt)

For both 2018/19 and 2019/20 the VAT threshold remains at £85,000.