Tax thresholds and tax allowances for tax year 2020/2021

Summary of changes to rates, thresholds and allowances for tax year commencing 6th April 2020.

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%

If you have any questions, call our Employee Support Team on 01925 644 860.