{"id":63,"date":"2020-07-23T09:52:35","date_gmt":"2020-07-23T09:52:35","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/lseg\/?page_id=63"},"modified":"2025-04-17T08:23:49","modified_gmt":"2025-04-17T08:23:49","slug":"tax","status":"publish","type":"page","link":"https:\/\/www2.wealthatwork.co.uk\/lseg\/understand-your-finances\/tax\/","title":{"rendered":"Tax"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text css=”.vc_custom_1617698422943{margin-bottom: 0px !important;}”]In this section we aim to give you a basic understanding of the common taxes you might pay as well as explain the rates and allowances for this tax year.\u00a0\u00a0<\/span><\/p>\n

It makes sense to understand and carefully consider how you draw your income in retirement. Using the annual tax allowances and reliefs available can have the effect of increasing your net income.<\/span><\/p>\n

Pension funds are now far more accessible and you should consider how your capital is invested and how your retirement income needs are addressed. Retaining as much capital as possible in the tax efficient wrappers of a pension and ISA will make the most of your returns.<\/span><\/p>\n

Below are the latest tax rates and allowances for the current tax year:<\/span><\/p>\n

1.0.0.20<\/div>\n

[\/vc_column_text][vc_empty_space height=”20px”][vc_toggle title=”Income Tax”]<\/p>\n\n\n\n\n\n\n\n
Band<\/th>\nTaxable income<\/th>\nTax rate<\/th>\n<\/tr>\n
Personal allowance<\/td>\nUp to \u00a312,570<\/td>\n0%<\/td>\n<\/tr>\n
Basic rate<\/td>\n\u00a312,571 to \u00a350,270<\/td>\n20%<\/td>\n<\/tr>\n
Higher rate<\/td>\n\u00a350,271 to \u00a3125,140<\/td>\n40%<\/td>\n<\/tr>\n
Additional rate<\/td>\nover \u00a3125,140<\/td>\n45%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

Different rates apply to individuals that are resident in Scotland. Please visit gov.uk to find out the different rates that apply.[\/vc_toggle][vc_toggle title=”National Insurance”]<\/p>\n\n\n\n\n\n
Earnings<\/th>\nClass 1 National Insurance rate<\/th>\n<\/tr>\n
Earnings within the basic rate tax band<\/td>\n8%<\/td>\n<\/tr>\n
Earnings over the basic rate tax band<\/td>\n2%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_toggle][vc_toggle title=”Capital Gains Tax”]The first \u00a33,000 of realised gain is exempt. The below rates apply to chargeable gains on assets other than residential property.<\/p>\n\n\n\n\n
Basic rate<\/td>\n18%<\/td>\n<\/tr>\n
Above basic rate<\/td>\n24%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_toggle][vc_toggle title=”Dividend Tax”]A Tax Free Dividend Allowance applies to the first \u00a31,000 of dividends received.<\/span><\/p>\n\n\n\n\n\n
Basic rate<\/td>\n8.75%<\/td>\n<\/tr>\n
Higher rate<\/td>\n33.75%<\/td>\n<\/tr>\n
Additional rate<\/td>\n39.35%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_toggle][vc_toggle title=”Capital Gains Tax for second homes & buy-to-let properties”]The first \u00a33,000 of realised gain is exempt. <\/span><\/p>\n\n\n\n\n\n
<\/td>\nResidential Property<\/th>\n<\/tr>\n
Basic rate<\/td>\n18%<\/td>\n<\/tr>\n
Above basic rate<\/td>\n24%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_toggle][vc_toggle title=”Dividend Tax”]A Tax Free Dividend Allowance applies to the first \u00a3500 of dividends received.<\/p>\n

 <\/p>\n\n\n\n\n\n
Basic rate<\/td>\n8.75%<\/td>\n<\/tr>\n
Higher rate<\/td>\n33.75%<\/td>\n<\/tr>\n
Additional rate<\/td>\n39.35%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_toggle][vc_toggle title=”Personal Savings Allowance”]<\/p>\n\n\n\n\n\n\n
Tax Rate<\/th>\nTax-free Allowance<\/th>\n<\/tr>\n
Basic 20%<\/td>\nUp to \u00a31,000<\/td>\n<\/tr>\n
Higher 40%<\/td>\nUp to \u00a3500<\/td>\n<\/tr>\n
Additional 45%<\/td>\nNo personal savings allowance<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_toggle][vc_toggle title=”Pensions”]<\/p>\n\n\n\n
Annual Allowance (AA)<\/td>\n\u00a360,000*<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

An eligible scheme member can contribute the higher of \u00a33,600 p.a and 100% of relevant UK earnings and receive tax relief, subject to the overriding annual allowance (\u00a360,000 for the current tax year). You can \u2018carry forward\u2019 unused AA from the previous 3 years (subject to HMRC rules).<\/p>\n

You can find out more about carry forward and also make use of the government’s AA calculators by visiting www.hmrc.gov.uk\/tools\/annualallowancelimit\/<\/a><\/p>\n

*subject to a taper if threshold income is above \u00a3200,000 and adjusted income is over \u00a3260,000.<\/span><\/p>\n

If you use the retirement flexibilities to access a defined contribution pension plan, this may reduce your AA to \u00a310,000.[\/vc_toggle][vc_toggle title=”Individual Savings Account”]<\/p>\n\n\n\n
\u00a0ISA Allowances<\/td>\n\u00a320,000*<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

*Up to \u00a320,000 can be held in cash and\/or stocks and shares.[\/vc_toggle]

\n
\n\t<\/i>\n<\/div><\/div><\/div><\/div>

Quick Tip<\/h2><\/div>
Marriage Allowance lets you transfer \u00a31,260 of your personal allowance to your husband, wife or civil partner if they earn more than you. To benefit as a couple (as the lower earner) you must have an income of \u00a312,570 or less.<\/span><\/p>\n

You are entitled to Marriage Allowance if all of the following apply:<\/strong><\/p>\n

You are married or in a civil partnership<\/span><\/p>\n

You don\u2019t earn anything or your income is under \u00a312,570<\/span><\/p>\n

Your partner\u2019s income is between \u00a312,571 and \u00a350,270 (UK excluding Scotland).<\/span><\/p>\n

You can still apply for Marriage Allowance if you or your partner:<\/strong><\/p>\n

Are currently receiving a pension<\/span><\/p>\n

Live abroad, as long as you get a Personal Allowance<\/span><\/div> <\/div> <\/div> [\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

[vc_row][vc_column][vc_column_text css=”.vc_custom_1617698422943{margin-bottom: 0px !important;}”]In this section we aim to give you a basic understanding of the common taxes you might pay as well as explain the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":11,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"full-width-page.php","meta":{"footnotes":""},"_links":{"self":[{"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/pages\/63"}],"collection":[{"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/comments?post=63"}],"version-history":[{"count":23,"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/pages\/63\/revisions"}],"predecessor-version":[{"id":1368,"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/pages\/63\/revisions\/1368"}],"up":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/pages\/11"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/lseg\/wp-json\/wp\/v2\/media?parent=63"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}