Tax Rates

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 Main Income Tax Reliefs
 Car Benefits
 National Insurance Contributions
 Pension Contributions
 Inheritance Tax
 Value Added Tax – VAT
 Capital Gains Tax – CGT
 Corporation Tax
 

Main Income Tax Reliefs

Band Taxable income Tax rate
Personal Allowance Up to £11,850 0%
Basic rate £11,851 to £46,350 20%
Higher rate £46,351 to £150,000 40%
Additional rate over £150,000 45

Personal AllowanceIncome tax bands are different if you live in Scotland

 

Car Benefits

The car benefit is calculated at a percentage of the new car’s list price. The list price includes accessories. There is no upper limit for the list price. List price is reduced for capital contributions made by the employee up to £5,000. Special rules may apply to cars provided for disabled employees.

The percentages can be seen in the table below and are based on the car's CO2 emissions in grams per kilometre up to a maximum of 37%. For diesel cars add a 4% supplement, but the maximum is still 37%. Cars that meet the Real Driving Emissions Step 2 (RDE2) standard are exempt from the diesel supplement.

For cars registered before 1 January 1998 and cars with no agreed CO2 emissions the charge is based on engine size.

Car Tax allowance

Car fuel benefit charge multiplier

Car fuel benefit applies if an employee has the benefit of private fuel for a company car. The benefit is calculated by applying the percentage used to calculate the car benefit to a 'fuel charge multiplier'. The charge does not apply to certain environmentally-friendly cars. The fuel benefit is reduced to nil only if the employee pays for all private fuel.

The fuel benefit charge for:

2018/19 - £23,400
2019/20 - £24,100

Find more information at: gov.uk/expenses-and-benefits-company-cars

Advisory fuel rates for company cars

Advisory rates apply where employers reimburse employees for business travel in a company car or require employees to repay the cost of fuel used for private travel in a company car.

If the rate paid per mile of business travel is no higher than the advisory rate for the particular engine size and fuel type of the car, HMRC will accept that there is no taxable profit and no Class 1 NIC liability.

Advisory Fuel Rates

Mileage Allowance Payments (MAP)
MAP per business mile for business Travel in employees own car.

MAP Fuel Rates

National insurance Contributions

Employee National Insurance rates

This table shows how much employers deduct from employees’ pay for the 2018 to 2019 tax year.

Category letter £116 to £162 a week (£503 to £702 a month) £162.01 to £892 a week (£702.01 to £3,863 a month) Over £892 a week (£3,863 a month)
A 0% 12% 2%
B 0% 5.85% 2%
C N/A N/A N/A
H 0% 12% 2%
J 0% 2% 2%
M 0% 12% 2%
Z 0% 2% 2%

 

Employer National Insurance rates

This table shows how much employers pay towards employees’ National Insurance for the 2018 to 2019 tax year.

Category letter £116 to £162 a week (£503 to £702 a month) £162.01 to £892 a week (£702.01 to £3,863 a month) Over £892 a week (£3,863 a month)
A 0% 13.8% 13.8%
B 0% 13.8% 13.8%
C 0% 13.8% 13.8%
H 0% 0% 13.8%
J 0% 13.8% 13.8%
M 0% 0% 13.8%
Z 0% 0% 13.8%

Pension Contributions

How much you must pay

The amount you must contribute to the pension scheme is determined by the scheme’s rules. However, if you’re using the scheme for automatic enrolment there are minimum contributions you must pay.

The minimum contributions that you must pay into your staff’s pension scheme are shown in the table below – they’re currently a total contribution of 5% with at least 2% employer contribution.

Minimum contributions are being introduced gradually over time. You will usually pay pension scheme contributions either as a fixed amount or based on a percentage of earnings.

Pension Contributions - Sawhney Consulting, Accountants in Wembley

Your minimum employer contribution

Pension contributions are usually expressed as a fixed sum or a percentage of earnings. If they’re expressed as a percentage you will need to confirm salaries with your pension provider / trustees regularly as necessary from time to time.

You also need to decide what elements of staff pay are used to calculate pension contributions, subject to any overriding legislative requirements, such as in relation to automatic enrolment. You may decide that only basic pay is pensionable but not bonus or overtime payments. Let your pension scheme know what you decide.

Inheritance Tax

Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.

There’s normally no Inheritance Tax to pay if either:

  • the value of your estate is below the £325,000 threshold
  • you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club

If the estate’s value is below the threshold you’ll still need to report it to HMRC.

If you give away your home to your children (including adopted, foster or stepchildren) or grandchildren your threshold can increase to £475,000.

If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die. This means their threshold can be as much as £950,000.

Inheritance Tax rates

The standard Inheritance Tax rate is 40%. It’s only charged on the part of your estate that’s above the threshold.The estate can pay Inheritance Tax at a reduced rate of 36% on some assets if you leave 10% or more of the "Net Value" to charity in your will.

Value Added Tax (VAT)

The standard VAT rate for most goods and services is 20%.

Some goods and services has 5% VAT like children's car seats and home energy.

Some goods and services like Children's clothes and most foods has 0% VAT.

Capital Gains Tax (CGT)

CGT is a tax on the profit when you sell (or gift, swap or get compensation for) something that’s increased in value.

It’s the gain you make that’s taxed, not the amount of money you receive.

You pay CGT on the gain when you sell:

If you dispose of an asset you jointly own with someone else, you have to pay Capital Gains Tax on your share of the gain.

Some assets are tax-free. You also do not have to pay CGT if all your gains in a year are under your tax-free allowance. The Capital Gains tax-free allowance is £12,000 or £6,000 for trusts

You do not pay Capital Gains Tax on assets you give or sell to your husband, wife or civil partner, unless:

 

Your spouse or civil partner may have to pay tax on any gain if they later dispose of the asset.

Their gain or loss will be calculated from when you or they first owned it.

You do not have to pay Capital Gains Tax on assets you give away to charity.

The tax year is from 6 April to 5 April the following year.

You can report any Capital Gains Tax you need to pay either:

  • straight away using the ‘real time’ Capital Gains Tax service
  • annually in a Self Assessment tax return

 

Capital Gains Tax rates

You pay a different rate of tax on gains from residential property than you do on other assets.

If you’re a higher or additional rate taxpayer you’ll pay:

 

28% on your gains from residential property

20% on your gains from other chargeable assets

 

If you are a basic rate tax payer, then add the CGT and If this amount is still within the basic Income Tax band you’ll pay 10% on your gains (or 18% on residential property). You’ll pay 20% (or 28% on residential property) on any amount above the basic tax rate.

 

Trustee or business

Trustees or personal representatives of someone who’s died pay:

  • 28% on residential property
  • 20% on other chargeable assets

You’ll pay 10% if you’re a sole trader or partnership and your gains qualify for Entrepreneurs’ Relief.

 

Using losses to reduce your gain

When you report a loss, the amount is deducted from the gains you made in the same tax year.

If your total taxable gain is still above the tax-free allowance, you can deduct unused losses from previous tax years. If they reduce your gain to the tax-free allowance, you can carry forward the remaining losses to a future tax year.

Corporation Tax

You must pay Corporation Tax on profits from doing business as:

  • a limited company
  • any foreign company with a UK branch or office
  • a club, co-operative or other unincorporated association, eg a community group or sports club

You don’t get a bill for Corporation Tax. There are specific things you must do to work out, pay and report your tax.

  1. Register for Corporation Tax when you start doing business or restart a dormant business. Unincorporated associations must write to HMRC.
  2. Keep accounting records and prepare a Company Tax Return to work out how much Corporation Tax to pay.
  3. Pay Corporation Tax or report if you have nothing to pay by your deadline - this is usually 9 months and 1 day after the end of your ‘accounting period’.
  4. File your Company Tax Return by your deadline - this is usually 12 months after the end of your accounting period.

Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.

Profits you pay Corporation Tax on

Taxable profits for Corporation Tax include the money your company or association makes from:

  • doing business (‘trading profits’)
  • investments
  • selling assets for more than they cost (‘chargeable gains’)

If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.

If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.

The Corporation Tax rate for company profits is 19%