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Income Tax rates and bands

The team of specialist Income Tax accountants at Franklin Underwood are on hand to assess your requirements and offer you all the advice you need regarding your Income Tax rates, arrangements and payments.

Main Allowances

Allowances 2019/20 2018/19
Personal Allowance (PA) * £12,500 £11,850
Marriage Allowance † 1,250 1,190
Blind Person's Allowance 2,450 2,390
Rent a room relief ** 7,500 7,500
Trading income ** 1,000 1,000
Property Income ** 1,000 1,000

* PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £123,700 or more (2018/19: £123,700).

† The part of the PA that is transferable to a spouse or civil partner who is not a higher or top rate taxpayer.

** If gross income exceeds it, the limit may be deducted instead of actual expenses.

Rate bands

2019/20 2018/19
Basic rate band (BRB) £37,500 £34,500
Higher rate band (HRB) 37,501 – 150,000 34,501 – 150,000
Additional rate over 150,000 over 150,000
Personal Savings Allowance (PSA)
– Basic rate taxpayer 1,000 1,000
– Higher rate taxpayer 500 500
Dividend Allowance (DA) 2,000 2,000

BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

Tax rates

Rates differ for General/Savings/Dividend income

2019/20 and 2018/19
Rates differ for General, Savings and Dividend income G S D
Basic rate 20% 20% 7.5%
Higher rate 40% 40% 32.5%
Additional rate 45% 45% 38.1%

General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). Scottish taxpayers are taxed at different rates on general income (see below).

To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.

The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.

Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 of dividend income at nil, rather than the rate that would otherwise apply.

Income tax - Scotland 2019/20

Band Rate
Starter rate £2,049 19%
Basic rate 2,050 – 12,444 20%
Intermediate rate 12,445 – 30,930 21%
Higher rate 30,931 – 150,000 41%
Top rate over 150,000 46%

The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.

High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

Remittance basis charge

For non-UK domiciled individuals who have been UK resident in at least:

For non-UK domiciled individuals who have been UK resident in at least: 2019/20 2018/19
7 of the preceding 9 tax years £30,000 £30,000
12 of the preceding 14 tax years £60,000 £60,000
15 of the preceding 20 tax years Deemed to be UK domiciled