Income Tax Rates

Income Tax Rates & Personal Allowances

Overview

Income tax - This is tax paid on your income and may be generated from a number of different sources: Income from employment and self-employment, pensions, social security, investments and savings, property and other miscellaneous income.

Income tax rates are the percentage rates at which tax is paid. More than one percentage rate may apply at a time, depending on your level of income and the type of income being taxed.

Questions you may ask:

  • How much tax will my employees have to pay on a company car? 
  • Would a company car affect the tax bandings of my employees?
  • How is the tax due calculated under an Optional Remuneration Arrangement?

How does it work?

Taxable benefits provided to your employees i.e. a company car, will be taxed as additional income at an employees highest marginal tax rate.

Allowances

Personal Allowances 2018/19 2019/20
Personal (irrespective of age) *** £11,850 £12,500
Income limit for Personal Allowance* £100,000 £100,000
Dividend Allowance £2,000 £2,000
Personal Savings Allowance** £1,000  £1,000
Married Couples Allowance (MCA) 2018/19 2019/20
Personal (irrespective of age) *** £8,695 £8,915
Income limit for Personal Allowance* £28,900 £29,600
Dividend Allowance £3,360 £3,360
Blind Persons Allowance 2018/19 2019/20
Personal (irrespective of age) *** £2,390 £2,450

* The Personal Allowance is reduced by £1 for every £2 that income exceeds £100,000

** Reduced to £500 for higher rate tax payers

***Spouses or civil partners are able to transfer up to 10% of their unused personal allowance to their partners. This is available provided neither person pays tax at the higher or additional rates and neither were born before the 6 April 1935.

Taxable Income

Income Tax Rates % 2018/19 2019/20
Basic Rate 20% £0 - £34,500 £0 - £37,500
Higher Rate* 40% £34,501 - £150,000 £37,501 - £150,000
Additional Rate 45% Above £150,000 Above £150,000

* Scottish taxpayers begin paying higher rate tax (41%) when their income exceeds £44,273 (2018/19)

The information provided is based on existing and proposed legislation as at November 2017 (2017 Autumn Budget). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.