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HMRC Income Tax Return
Calculator for 2019/20

HMRC Tax Returns Deadlines and Taxable Income Includes

A tax year runs from 6 April 2019 to 5 April 2019 of the current financial year 2019/20.

Taxable Income Includes:

  • Salary / take-home pay received from employer, including benefits in kind like company vehicle
  • Self-employment income
  • Income for personal, state and occupational pensions
  • Benefits from social security
  • Interest received on savings
  • Income from dividends received / shares
  • Income from rental
  • Income received from a trust
HMRC Income Tax Calculator

There are certain exemptions or income from certain source that fall under the non-taxable bracket. Also, income tax liability does not have any age criteria. The only thing that matters is the income earned and if the income is below or above the taxable limit. For a taxable individual it is imperative, by law, to keep all the records of income and expenses that are claimed against tax. These records will be required if HMRC instructs to complete a tax return.

How Income Tax is Calculated

The following steps will give an overview of how the taxable income and income tax payable is computed. Since, the rules for income tax are complex dns Accountants can help taxpayers with any tax issues they come across.

Step 1: Taxable income from all the sources, before tax, is added. For a fiscal year or financial year, this may include salary or take-home pay received or profit from self-employment, taxable social security benefits, rental income, interest on savings, and pensions. The non-taxable income is not included. This may comprise of pension credit, child tax credit, lottery winning, housing benefits, maternity allowance, working tax credit etc. This step will give a clear understanding of what is the total income for computing the payable tax.

HMRC Income Tax Rates and Bands

Band Rate Income after allowances Income after allowances Income after allowances
2019 to 2020 2018 to 2019 2017 to 2018
Individual UK
Starting rate for savings 10% Up to £5,000 Up to £5,000 Up to £5,000
Basic rate 20% Up to £37,500 Up to £34,500 Up to £33,500
Higher rate 40% £37,501 to £150,000 £34,501 to £150,000 £33,501 to £150,000
Additional rate 45% Over £150,000 Over £150,000 Over £150,000
Individual in Scotland
Starter rate in Scotland 19% Up to £2,049 Up to £2,000 -
Basic rate in Scotland 20% £2,050 to £12,444 £2,001 to £12,150 Up to £31,500
Intermediate rate in Scotland 21% £12,445 to £39,930 £12,151 to £31,580 -
Higher rate in Scotland 40% £30,931 to £150,000 £31,581 to £150,000 £31,501 to £150,000
(41% from 2018 to 2019)
Top rate in Scotland> 46% Over £150,000 Over £150,000 Over £150,000
Individual in Wales
Basic rate in Wales 20% Up to £37,500 Up to £34,500 Up to £33,500
Higher rate in Wales 40% £37,501 to £150,000 £34,501 to £150,000 £33,501 to £150,000
Wales Additional rate 45% Over £150,000 Over £150,000 Over £150,000
Trust
Standard Rate 20% up to £1,000 up to £1,000 up to £1,000
Higher Rates 45% over £1,000 over £1,000 over £1,000

National Insurance Contribution Rates for Employee and Employer

While checking if the correct amount of tax has been deducted from the pay, it is also important to check if correct national insurance (NI) contributions have been deducted, so that the take-home pay amount is correct. NI contributions are computed on gross pay and it may vary for employees depending on the pension arrangements and income level.

For self-employed individuals, NI contributions have different rates, depending on the profits.

National Insurance Contribution Thresholds

NATIONAL INSURANCE CONTRIBUTIONS
Class 1

Employer

Employee

Earnings per week

Rate payable

Earnings per week

Rate payable

£0.01 - £166

Nil

£0.01 - £166

Nil

£166.01 - £962

13.80%

£166.01 - £962

12%

Over £962

13.80%

Over £962

2%

Class 1A and 1B (Employers only)

13.80%

 

 

Class 2 (Self-employed)

 £3 a week (if your profits are £6,365 or more a year)

Class 3 (Voluntary)

£15 per week

Class 4 (Self-employed)

Profits between £8,632 and £50,000

9%

Profits over £50,000

2%

Step 2: Compute if there is any tax relief for the money spent during a financial year. The money spent can be towards pension scheme or paying employment expenses. Such expenses are taking out from the total income. For self employed individuals, business expenses are reduced to arrive at taxable profit

Step 3: HMRC Income Tax Personal Allowance – Verify the entitled tax free allowances. People living in the United Kingdom are permitted a basic personal allowance on a daily basis. Personal allowance is less for income greater than £100,000 and people born before 6 April 1948*, are entitled to a high personal allowance, while it might be limited depending on the income. People who are differently abled – blind individuals can get a Blind Person’s allowance. Deducting the allowances, tax is payable on the remaining income referred to as taxable income.

Income Tax Rates and Allowances for 2019-2020

Income Tax Allowances 2019/20 2018/19

Basic personal allowance 

 £12,500

£11,850

Basic Rate Limit (BRL)

£37,500

£34,500

Married/civil partners allowance

 £8,915

£8,695

Minimum married/civil partners allowance

 £3,450

£3,360

Married/civil partners transferable allowance

£1,250

£1,185

Income limit

£29600

£28,900

Blind persons allowance

 £2,450

£2,390

Rent a room limit

£7,500

£7,500

Savings allowance

£1,000

£1,000

Trading income

£1,000

£1,000

Property income

£1,000

£1,000

Dividend allowance

£2,000

£2,000

Step 4: Payable tax for 2019 – 2020 can be computed based on an Example: If the taxable income is £11,000 after subtracting the personal allowance from total income, an individual does not have any taxable income above the basic rate limit of £37,500. Hence, the tax payable is £11,000 * 20% = £2,200

Step 5: To claim married couple’s allowance, an individual should be in a civil partnership or married, and either of the two should be born before 6 April 1935*. If this statement is valid, 10% of the married couple’s allowance is deducted from the payable tax

The above mentioned steps may not hold good if:

  • an individual is self-employed and incurred a loss for the year
  • an individual was born before 6 April 1948, and made charitable payments under Gift Aid and because of the level of income, age-related personal allowances are reduced
  • an individual has an overseas income which is tax abroad

* In April 2013, the United Kingdom government cancelled all age-related personal allowance. During tax year 2015 – 2016 this was restricted to people born before 6 April 1948. However, this is same for everyone now due to increases in the basic Personal Allowance.

HMRC Income Tax Allowances 2019-20

The amount of income tax paid each year depends upon:

  • the amount of income above the personal allowance
  • how much amounts falls in each tax band

Some income is tax-free and individuals don’t pay tax on:

  • interest on savings from savings allowance
  • income from Individual savings accounts (ISA), National savings certificates (tax-exempt accounts)
  • the initial dividend amount of £2,000 from company shares, and others

Tax-Free Personal Allowance 2019-2020

Tax Rate (Band) Taxable Income Tax Rate

Personal allowance

Up to £12,500

0%

Basic rate

£12,501 to £50,000

20%

Higher rate

£50,001 to £150,000

40%

Additional rate

Over £150,000

45%

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