Spring Budget 2020 – Income Tax Rates & Allowances

Income Tax Rates Allowances

Spring Budget 2020 – Income Tax Rates & Allowances

As expected, it has been confirmed that the 2020-21 personal allowance will be maintained at £12,500 and the basic rate limit at £37,500. As a result, the higher rate threshold will also remain at £50,000 from April 2020. The basic rate limit applies to non-savings and non-dividend income in England, Wales and Northern Ireland and to savings and dividend income in the UK.

Changes to the Scottish bands were announced on 6 February 2020 as part of the Scottish Budget measures. Since April 2017, the Scottish Parliament sets the basic rate and higher rate thresholds for non-savings and non-dividend income in Scotland.

For high earning taxpayers the personal allowance is gradually withdrawn by £1 for every £2 of adjusted net income over £100,000 irrespective of age. Adjusted net income is total taxable income before any personal allowances, less certain tax reliefs such as trading losses and certain charitable donations and pension contributions. Any taxpayers with an adjusted net income of between £100,000 and £125,000 in 2020-21 will pay an effective marginal rate of tax of around 60% as the tax-free personal allowance is gradually withdrawn.

For more information on Income Tax Rates Allowances, Book a Free Consultation

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