Tax Rates and Allowances for Small Businesses – 2019/20

[vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″ tablet_text_alignment=”default” phone_text_alignment=”default”][vc_column_text]

Tax Rates and Allowances for Small Businesses – 2019/20

[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″ tablet_text_alignment=”default” phone_text_alignment=”default”][vc_column_text]Here are the main small business tax rates and allowances for the tax year of 2019/20.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Corporation Tax

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]You have to pay 19% Corporation Tax if your profit falls below £300,000.

If your annual profit exceeds £300,000 then you have to also pay 19% Corporation Tax. You can find out more in our corporation tax guide.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Value Added Tax (VAT)

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]You have to register for VAT if your turnover over the past 12 months is £85,000 or more.

The de-registration threshold is £83,000.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Dividend Tax

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]Tax on dividends is paid at a rate set by HMRC on all dividend payments received.

Anyone with dividend income will receive £2,000 tax-free, no matter what non-dividend income they have.

Dividend basic rate is 7.5%. £0 to £37,500 on taxable income over the Personal Allowance In England.

The dividend higher rate is 32.5%. £37,501 to £150,000 on taxable income over the Personal Allowance in England

Dividend additional rate is 38.1%. Over £150,000 of taxable income.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Income Tax – Personal Allowance

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The personal allowance (the amount you can earn before any income becomes taxable) is £12,500.

You will not receive a tax-free personal allowance at all if you earn £123,700 or more.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Income Tax Bands

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The basic rate band is 20% and applies to income up to £50,000.

The higher rate band is 40% and applies to income from £50,001 to £150,000.

The upper (additional) rate band is 45% and applies to income of £150,000 and above.

National Insurance Contributions (NICs)

If you run a company (or work for one), then Class 1 NICs apply.

Employees’ Class 1 NICs are payable at 12% on salaries received between £166 and £962 per week. Any earnings above the upper earning limit (£962) will be taxed at 2%.

Employers’ Class 1 NICs are payable at 13.8% on earnings above £166 per week.

For sole traders and partnerships, you pay Class 2 and Class 4 NICs.

Class 2 NICs are payable at £3.00 per week and are paid by anyone earning £6,365 or more through self-employment during the tax year.

Class 4 NICs are paid on profits you make as a self-employed person. The Class 4 NIC rate is 9% of annual profits between £8,4632 and £50,000, and an additional 2% on profits above £50,000 per year.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Pensions Savings Tax Relief

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The annual allowance limit remains at £40,000.

The maximum tax-free lump sum is 25% of your pension pot.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Individual Savings Accounts (ISAs)

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The overall ISA investment limit remains £20,000.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Capital Gains Tax

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]If you pay higher rate income tax you’ll pay 28% on your gains from residential property, and 20% on your gains from other chargeable assets.

If you pay basic rate income tax you’ll pay 18% on your gains from residential property, and 20% on your gains from other chargeable assets.

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

Each individual has an annual CGT exemption of £12,500.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Capital Allowances

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The Annual Investment Allowance (AIA) is £200,000 and has remained at this since 2016.

First-year allowances remain at 100%.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Inheritance Tax

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The Inheritance Tax Threshold (IHT) remains at £325,000. The standard inheritance tax rate is 40% of anything over the £325,000 threshold.[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]

Stamp Duty Land Tax

[/vc_column_text][divider line_type=”No Line” custom_height=”20″][vc_column_text]The SDLT regime rates are as follows, charged on a progressive basis (i.e. no longer just on the band into which the purchase price falls):

Up to £125,000 – no tax

£125,001 – £250,000 – 2%

£250,001 – £925,000 – 5%

£925,001 – £1,500,000 – 10%

£1,500,000 or more – 12%[/vc_column_text][/vc_column][/vc_row][vc_row type=”in_container” full_screen_row_position=”middle” scene_position=”center” text_color=”dark” text_align=”left” overlay_strength=”0.3″][vc_column column_padding=”no-extra-padding” column_padding_position=”all” background_color_opacity=”1″ background_hover_color_opacity=”1″ width=”1/1″ tablet_text_alignment=”default” phone_text_alignment=”default”][divider line_type=”No Line” custom_height=”30″][/vc_column][/vc_row]