Following on from our earlier Budget 2020 Summary below we have produced a quick calculator to show you how your taxes will be worked out from April 2020. It will account for any mixture of income sources/types and the figures are based on the finalised information provided the Treasury.
If the calculator didn't load, click here to reload the page. Read on below for a summary of the tax changes, you can also see a table of tax rates and allowances for 2020 in our dedicated tax rates section.
The personal allowance from April 2020 is going to remain the same as the previous year. This is due to a freeze that was mentioned in the paperwork after the last Budget two years ago. The government had a target to hit £12,500 for the tax-free personal allowance and decided to set the amount one year early. Due to this, the allowances and bands are remaining frozen this year but will go up by inflation from next year on.
The other tax changes detailed from April 2020 on are a big (relative) jump to the primary national insurance contribution threshold. The threshold for when NICs are deducted from income is at £9,500. An £868 push to the threshold and one that allowed Chancellor Rishi Sunak to declare people would be paying less tax this April.
The linked employers NIC 'secondary threshold' didn't get as big a push and was increased by inflation only to £8,788. The lower earnings limit was raised by £2. Speaking of NICs, self employed people making Class 2 NIC weekly payments had their threshold raised to £6,475 from £6,365, with a five pence per week increase to their payment at £3.05 per week.
Employers also see the £3,000 they can deduct off their ER NIC bill increased to £4,000.
There are many changes to company car tax, including the zero rate BIK for EV's. In addition, the fuel benefit multiplier increases by £400 to £24,500. You can use our company car tax calculator or BIK calculator to check these. EV's are also to be exempted from the five year £325 annual VED surcharge that is normally applied when the list price of the car exceeds £40,000.
The last big change to direct income taxes is to capital gains tax, where the annual exempt amount will become £12,300. A £300 increase from the current £12,000.
Do these tax changes actually amount to much once inflation is factored in? Use our salary inflation calculator to check for yourself.