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Personal tax after the Budget

Notable for what didn’t change, as well as what did. 

2020/21 England, Wales and Northern Ireland income tax rates and bands remain unchanged:

Band nameRateBand
Basic rate20%£1-£37,500
Higher rate40%£37,501- £150,000
Additional rate45%Over £150,000

For Scottish taxpayers, the position is different:

Band nameRateBand
Starter rate19%Over £12,500* – £14,585
Scottish Basic rate20%Over £14,585 – £25,158
Intermediate rate21%Over £25,158 – £43,430
Higher rate41%Over £43,430 – £150,000
Top rate46%Over £150,000

* Assumes individuals are in receipt of the standard UK Personal Allowance.

There were no major changes to the Inheritance Tax regime – perhaps surprising given recommendations in last year’s report by the Office of Tax Simplification. It may be that the autumn Budget brings further developments.

The Budget addressed pension issues experienced by high earners such as GPs and NHS consultants, with an increase to the two income thresholds used to calculate the tapered annual allowance. Tapered annual allowance is triggered when both ‘threshold’ income and ‘adjusted’ income exceed a particular level. From 6 April 2020, threshold income (broadly net income before tax, excluding pension contributions) increases from £110,000 to £200,000. Adjusted income (broadly net income plus pension accrual) increases from £150,000 to £240,000. This should take about 200,000 higher earners out of this particular tax trap. There is also change to the minimum tapered annual allowance, which can now fall to a low of £4,000 rather than £10,000. This, however, will only impact those with adjusted income of more than £300,000.