Tax thresholds and tax allowances for tax year 2020/2021
Income Tax rates
Item |
2019/20 |
2020/21 |
What does this mean? |
|
Personal Allowance |
£12,500 |
£12,500 |
An employee can earn (pro-rata) £12,500 per year before paying any tax at all if they are on the standard 1250L tax code for the next year, that's £240 per week or £1042 per month |
|
Basic rate (20%) |
£12,500 to £37,500 |
£12,500 to £37,500 |
Earnings (pro-rata) on top of the personal allowance up to £37,500 (i.e £12,500 - £37,500) will be taxed at the basic rate of 20% |
|
Higher rate (40%) |
£37,501 to £150,000 |
£37,501 to £150,000 |
Earnings (pro-rata) on top of the personal allowance and basic tax band will be taxed at the higher rate of 40% |
|
Additional rate |
45% |
45% |
Any earnings over £150,000 are taxed at 45% |
National Insurance rates
Item |
2019/20 |
2020/21 |
What does that mean? |
|
Primary Threshold (PT) |
£166 |
£183 |
Employees can earn £183 per week before paying Employee's National Insurance at 12% |
|
Secondary Threshold (ST) |
£166 |
£169 |
Employees can earn £169 per week before Parasol pay Employer's National Insurance at 13.8% |
|
Upper Earnings Limit (UEL) |
£962 |
£962 |
Any weekly earnings above £962 are subject to employee National Insurance contributions at the lower rate of 2% |