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Tax Rates 2019/20

Break down what the taxman gets

Tax Rates
Helen Saxon
Updated 4 April 2019

Nothing's as certain as death and taxes. Yet while there's no doubt we'll all be taxed, the rates can change rapidly. Will you pay income tax at the basic rate of 20% or will you end up in the higher-rate 40% tax bracket (or 19%, 21% or 41% in Scotland)?

This guide covers income tax thresholds, the personal allowance, national insurance and more for the tax year 2019/20, starting 6 April. 

In this guide

Free Income Tax Calculator

To check what your take-home pay should be, including pension contributions and student loan repayments, use our free Income Tax Calculator (it's being updated for the new tax year).

Always factor in income tax and national insurance 

While your income tax rate is important, it’s not the only thing to affect your take-home pay. You also need to factor in national insurance (assuming you're below state pension age).

In this guide we explain the differences between them, the thresholds and the rates you'll pay, including those in Scotland, which vary from the rest of the UK.

And remember, what you'll actually get deducted from your pay packet will be a combination of income tax and national insurance.

What's my personal tax allowance?

Personal Tax Allowance

Each of us has a 'personal allowance'. This is the amount we can earn without paying any income tax. 

If you earn more than your personal allowance, you pay tax at the applicable income tax rate on all earnings above the personal allowance, but the allowance itself remains untaxed.

What's my personal tax allowance?

EARNING BRACKET PERSONAL ALLOWANCE
Under £100,000 £12,500 
£100,000 to £125,000  Decreases from £12,500 by £1 for every £2 you earn above £100,000, until it reaches £0
Over £125,000 £0
Extra allowances
Are you blind? Your personal allowance + £2,450 

Are you married or in a civil partnership?

If you've answered yes, and you and your partner were born on or after 6 April 1935, then you may be entitled to the marriage tax allowance. This allows couples to transfer a proportion of their personal allowance between them.

For the 2019/20 tax year, the marriage tax allowance has gone up to £1,250. This means the tax saving will go up from £238 to £250.

Alternatively, if one of you was born before 6 April 1935, you can get a different married couple's allowance, which is also available to civil partners. See the Government's married couple's allowance calculator to see exactly what you'll get.

Ten per cent of the married couple's allowance is subtracted from your annual income tax bill. If you were married before 5 December 2005, it is automatically worked out using the husband's salary. For couples married on or after 5 December 2005, it uses the highest earner's salary.

What income tax band am I in?

Once you know your personal allowance, anything extra earned above that will be subject to income tax. For the 2019/20 tax year, if you live in England, Wales or Northern Ireland, there are three marginal income tax bands –the 20% basic rate, the 40% higher rate and the 45% additional rate (also remember your personal allowance starts to shrink once earnings hit £100,000).

If you live in Scotland, there are five marginal income tax bands  – the starter rate of 19%, the 20% basic rate, the 21% intermediate rate, the 41% higher rate and the 46% additional rate.

To find out your income tax rate, see the tables below. The first is for those in England, Wales or Northern Ireland, and the second is for those in Scotland.

What is my income tax rate for 2019/20?

EARNINGS (IF YOU LIVE IN ENGLAND, WALES OR NORTHERN IRELAND) RATE
Under your personal allowance (PA)
For most, £12,500		 No income tax payable
Between PA and PA + £37,500 (basic rate)
For most, over £12,500 to £50,000		 20%
Between PA + £37,500 and £150,000 (higher rate)
For most, over £50,000 to £150,000 		 40% (1)
Over £150,000 (additional rate) 45%

(1) Personal allowance drops by £1 for every £2 earned over £100,000.

I'm in Scotland. What is my income tax rate for 2019/20?

EARNINGS (IF YOU LIVE IN SCOTLAND)  RATE
Under your personal allowance (PA)
For most, £12,500		 No income tax payable
Between PA and PA + £2,049 (starter rate)
For most, over £12,500 to £14,549		 19%
Between PA + £2,049 and PA + £12,444 (basic rate)
For most, over £14,549 to £24,944		 20%
Between PA + £12,444 and PA + £30,930 (intermediate rate)
For most, over £24,944 to £43,430		 21%
Between PA + £30,930 and £150,000 (higher rate)
For most, over £43,430 to £150,000 		 41% (1)
Over £150,000 (additional rate) 46%

(1) Personal allowance drops by £1 for every £2 earned over £100,000.

Marginal bands mean you only pay the specified tax rate on that portion of salary. For example, if your salary puts you in the 40% tax bracket (between PA + £34,500 and £150,000 in 2018/19, unless you live in Scotland), then you only pay 40% tax on the segment of earnings in that income tax band. For the lower part of your earnings, you'll still pay the appropriate 20% or 0%.

Do you submit self-assessment tax returns?

The next deadline for submitting your self-assessment tax return is 31 January 2020. This is for the 2018/19 tax year, which ended on 5 April 2019.

  • What happens after I've filed my tax return?

    Once you've filed your return, you'll get your tax bill. If you did a paper return, you'll receive it by post.

    If you did an online return, you have two opportunities to view your bill:

    • Before you submit your return (in the 'View my calculation' section)
    • After you've submitted your return, in your final tax calculation. Beware it can take up to 72 hours for this to show on your account

    What you owe will be referred to as the 'balancing payment' on your bill. If you made any payments in a previous year towards the current year's bill, you'll need to deduct them from your balance to work out what you owe.

  • Can I get help to file my tax return?

    If you need help filling in your self-assessment return, you can:

    • Appoint someone to help you (such as an accountant or a friend)
    • Watch HM Revenue & Customs' videos on how to complete an online tax return
    • Contact it for help online or by telephoning 0300 200 3310

Other tax-free allowances

Since April 2016, your savings interest has been paid to you tax-free, and the personal savings allowance (PSA) has come into play. The PSA means every basic-rate taxpayer can earn £1,000 interest a year without paying tax on it. Higher-rate payers get a £500 allowance, and additional-raters don't get an allowance.

There's no change to savings allowances in 2019/20.

If you're a low earner, there's another tax-free allowance you get, called the starting rate for savings income. This allows you to earn another £5,000/year in savings interest tax-free if you earn less than £12,500/year this tax year. For every pound you earn above this threshold, you lose a pound of savings allowance. For more on this, see our Tax-Free Savings guide.

What's national insurance?

In addition to plain old income tax, most UK workers also have national insurance contributions deducted from their pay. These kick in based on your earnings from the age of 16, and you usually stop paying when you reach state pension age.

What's my 2019/20 national insurance rate?

EARNINGS TABLE_CELL_STYLE  NATIONAL INSURANCE RATE (FOR EMPLOYED, NOT SELF-EMPLOYED)
Per week Annual salary  
Under £166 Under £8,632 No national insurance payable
£166 to £962 £8,632 to £50,000 12% on everything earned between £166 and £962 a week
Over £962 Over £50,000 12% on everything earned between £166 and £962 a week, 2% on everything above that
Some advanced national insurance rules are complicated. See the HMRC website for full rates.

What if I'm self-employed?

The national insurance rules if you're self-employed are more complicated than those for employees. You usually pay two sorts of national insurance contributions (NICs) – class 2 and class 4.

NICs are paid on profits you make, which are calculated by deducting your expenses from your self-employment income, above a certain threshold. Most self-employed people pay national insurance through self-assessment.

What are my 2019/20 class 2 NICs?

PROFITS (PER YEAR) CLASS 2 NIC RATE (FOR SELF-EMPLOYED, NOT EMPLOYED)
Under £6,365 No national insurance payable
Over £6,365 £3 a week
Some advanced national insurance rules are complicated. See the HMRC website for full rates.

What are my class 4 NICs?

PROFITS (PER YEAR) CLASS 4 NIC RATE (FOR SELF-EMPLOYED, NOT EMPLOYED)
Under £8,632 
 No national insurance payable
£8,632 to £50,000 
 9%
Over £50,000 
 9% on everything earned between £8,632 and £50,000, 2% on everything above that
Some advanced national insurance rules are complicated. See the HMRC website for full rates.

Voluntary national insurance contributions

If you have gaps in your national insurance (NI) record, for example because you earned less than the NI threshold or were living abroad, it could mean that you don't qualify for the full state pension.

If you want to plug these gaps, you may be able to pay voluntary class 3 NICs – and you can usually fill gaps for the past six tax years. For more information see our State Pension guide.

What are my class 3 NICs?

RATE PER WEEK RATE PER YEAR
 £15   £780 
Some advanced national insurance rules are complicated. See the HMRC website for full rates.

Capital gains tax

Capital gains tax (CGT) is one of the least common taxes on income, and for many it won't apply. However, if you sell or give away an asset worth more than £6,000, you could have to pay CGT. It doesn't apply for main homes, cars or lottery/pools winnings, among other things.

Each year, individuals have an 'annual exempt amount' that allows them to receive some gains tax-free. Above this, you pay CGT on all gains.

2019/20 capital gains tax

Annual exempt amount £12,000 for individuals
Standard CGT rate 18% on residential property, 10% on other assets 
Higher CGT rate 28% on residential property, 20% on other assets
Your rate of CGT will depend on your other taxable income. See Gov.uk for more on how to work this out, and for more on the increased annual exempt amount, see this Gov.uk webpage.

If you give or sell assets to your spouse or civil partner, you won't have to pay CGT, unless:

  • You separated and didn't live together during that tax year
  • The assets you gave them were sold on via their business

It's worth giving or selling your assets to your spouse or civil partner if you'll exceed 2019/20's exempt amount of £12,000, but your partner won't. That way, neither of you will need to pay CGT.

If they later sell the asset...

Your spouse or civil partner may have to pay tax on any gain if they later sell the asset.

Dividend tax

There are two ways you make money from investing. One is when the shares increase in value and then you reap a nice profit when you sell them. The other is when they pay dividends.

Dividends are a bit like interest on a savings account. If a company makes a profit, it gives some of it back to you – it could be on a regular basis or as a one-off. And just as you have a personal savings allowance for tax-free interest on savings, you also have a tax-free dividends allowance.

The allowance for tax-free dividends is unchanged at £2,000 for the 2019/20 tax year and there's no change for dividend tax.

Any dividends received above this allowance are taxed at the rates shown below, unless your shares are held in a stocks & shares ISA (where dividends are always tax-free).

No change for dividend tax

TAX BRACKET  RATE 
Basic rate 7.5%
Higher rate 32.5%
Additional rate 38.1%

If you earn more than £2,000 a year in dividend income outside of a stocks & shares ISA you'll need to inform HMRC.

Paying into a pension?

One of the key attractions of pensions is the tax breaks they give savers. Generally, when you put money into a pension, the Government tops up your contribution with tax relief. 

Basic-rate taxpayers receive 20% tax relief on their pension contributions. Higher-rate taxpayers can get up to 40% relief – or up to 45% for top-rate taxpayers – though they may need to claim the additional relief through their tax returns. Scottish taxpayers paying slightly higher rates of income tax (21%, 41% or 46%) than elsewhere in the UK also need to claim their extra tax through their tax returns. 

If you're not a taxpayer, eg, you don't earn enough to pay income tax, but are contributing to a pension, you'll still have the tax saving added to your contributions up to a certain amount. You'll be given an extra £20 for every £80 you pay into a pension up until you've contributed £2,880. This means the Government tops up your pension to £3,600.

Generally, you can put as much as you earn each tax year into your pension and receive tax relief, up to an annual contribution limit of £40,000. 

This limit – called the annual allowance – includes the money you put into your pension, the basic-rate tax relief the Government adds, and any contributions your employer makes.   

However, for high-earners with incomes over £150,000, the £40,000 annual allowance is reduced.

If you use pension freedom rules to access your pension pot, your annual allowance will drop to £4,000 for that year.

Birds Nest

While the reliefs and limits mentioned above are unchanged for 2019/20, the pension lifetime allowance – a limit on the total value you can build up in all your pensions without suffering a tax charge – is going up to £1,055,000 for 2019/20.

Pension contribution limits 

Annual tax-free contribution limit £40,000
Lifetime tax-free contribution limit £1,055,000

To check what your take-home pay should be, including pension contributions and student loan repayments, use our free Income Tax Calculator.

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Tax Rates 2018/19

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