Summary of Tax Data Income Tax 2020-21 2019-20 TAX RATES AND BANDS Basic rate 20% 20% Higher rate 40% 40% Additional rate 45% 45% Basic rate limit 37,500 37,500 Higher rate limit 150,000 150,000 16:45:17- 598801 - 81.97.27 155 Different tax rates and bands apply to the non-savings income of Scottish taxpayers (see below) Starting rate for savings 0% 0% Starting rate limit for savings 5,000 5,000 Personal savings allowance (basic rate taxpayer) 1,000 1,000 Personal savings allowance (higher rate taxpayer) 500 500 Dividend ordinary rate 7.5% 7.5% Dividend upper rate 32.5% 32.5% Dividend additional rate 38.1% 38.1% Dividend allowance 2,000 2,000 SCOTTISH TAX RATES AND BANDS Starter rate 19% 19% Basic rate 20% 20% Intermediate rate 15/01/2021 16:45:17 - 598801 - 21% 27.139 21% Higher rate 41% 41% Top rate 46% 46% Starter rate limit 2,085 2,049 Basic rate limit 12,658 12,444 Intermediate rate limit 30,930 30,930 Higher rate limit 150,000 150,000 # These tax rates and bands apply only to the non-savings income of Scottish taxpayers 18% PERSONAL ALLOWANCES 2020-21 2019-20 Personal allowance 12,500 12,500 Marriage allowance 1 250 1,250 Blind person's allowance 2,500 2,450 Married couple's allowance: Born before 6 April 1935 9,075 8,915 Minimum amount 3510 3,450 Income limit for basic personal allowance 100,000 100,000 Income limit for married couple's allowance 21 16:45: 30 200 301 - 81 29,600 39 CAR AND FUEL BENEFIT 21 16:45:17 - 598801 - 81.97.27.139 Zero emissions 0% 16% *1-50 g/km (depending upon electric range) 2%-14% 16% *51g/km to 54g/km 15% *55g/km to 59g/km 16% *60g/km to 64g/km 17% *65g/km to 69g/km *70g/km to 74g/km 19% *75g/km 20% 51 g/km to 75g/km 19% 76g/km to 94g/km 22% 95g/km 23% Each additional 5g/km +1% +1% Maximum charge 37% 37% Amount used in car fuel benefit calculation 24,500 24,100 * These percentages 2% lower in 2020-21 if car registered on or after 6 April 2020 CAPITAL ALLOWANCES Writing Down Allowance (WDA) Main pool of plant and machinery 18% 18% Special rate pool of plant and machinery 6% 6% Annual Investment Allowance (AIA) 100% 100% AIA annual limit from 1 January 2016 200,000 200,000 First Year Allowances (FYAs) 100% 100% Structures and Buildings Allowances (SBA) 3% 2% AIA annual limit temporarily raised to Im between 1 January 2019 and 31 December 2020 PENSION SCHEMES Annual allowance 40,000 40,000 Lifetime allowance 1,073,100 1,055,000 2019-20 118 166 962 166 962 12% 2% 13.8% 3,000 National Insurance Contributions 2020-21 CLASS 1 Lower earnings limit (weekly) 120 Primary threshold (weekly) 1997.27.139 183 Upper earnings limit (weekly) 962 Seconday threshold (weekly) 169 Upper secondary threshold (weekly) 962 Employee contributions Rate on earnings between primary threshold and UEL 12% Rate on earnings beyond UEL 2% Employer contributions Rate on earnings beyond secondary threshold 13.8% Employment allowance 4,000 CLASS 1A Rate 13.8% CLASS 2 Weekly contribution 3.05 Small profits threshold 5:17 - 598801 - 81.97.27.139 6,475 CLASS 3 Weekly contribution 15.30 CLASS 4 Lower profits limit 9,500 Upper profits limit 50,000 Rate on profits between lower and upper limit Rate on profits beyond upper limit 2% 13.8% 3.00 6,365 15.00 9% 8,632 50,000 9% 29 10% Capital Gains Tax 2020-21 2019-20 Standard ratet 10% Higher ratet 20% 20% Business asset disposal relief rate 10% 10% Business asset disposal relief lifetime limit 1,000,000 10,000,000 Annual exempt amount 12,300 12,000 Taxable gains on the disposal of residential property are taxed at 18% and 28% Corporation Tax Financial Year FY2020 Main rate 19% Patent box (effective rate) 10% R&D SMEs payable credit 14.5% R&D expenditure credit 13% Note: The main rate for FY2021 will be 19%. FY2019 19% 10% 14 5% 12% FY2018 19% 10% 14.5% 12% FY2017 19% 10% 14.5% 11% FY2016 20% 10% 14.5% 11% Inheritance Tax Date of transfer Nil rate Rate on life- Rate Lower band time transfers on death rate 6 April 2006 to 5 April 2007 0-285,000 20% 40% 6 April 2007 to 5 April 2008/01/ 0-300,000 17 - 520% 1 - 81.940% 139 6 April 2008 to 5 April 2009 0 - 312,000 20% 40% 6 April 2009 to 5 April 2012 0 - 325,000 20% 40% 6 April 2012 to 5 April 2021 0 - 325,000 20% 40% 36% Note: The residence nil rate band for 2020-21 is 175,000. Value Added Tax Standard rate 20% (from 4 January 2011) Reduced rate 5% 5/01 Registration thresholdt..801 - 81.97.2 85.000 (from 1 April 2017) Deregistration thresholdt 83,000 (from 1 April 2017) + Thresholds frozen until April 2022 Question 3 Walter is a self-employed trader who prepares accounts to 31st March each year. He has no main or special rate pools at the start of the year to bring forward. His purchases of plant during the current year were as follows: 15 April 2020 20 August 2020 Bought machine Bought motor car (CO2 emissions 190g/km) 215,000 34,600 The car was for use by Walter and had 40% private use. Required Compute the Capital allowances which may be claimed for the year to 31st March 2021. Total: 5 marks Summary of Tax Data Income Tax 2020-21 2019-20 TAX RATES AND BANDS Basic rate 20% 20% Higher rate 40% 40% Additional rate 45% 45% Basic rate limit 37,500 37,500 Higher rate limit 150,000 150,000 16:45:17- 598801 - 81.97.27 155 Different tax rates and bands apply to the non-savings income of Scottish taxpayers (see below) Starting rate for savings 0% 0% Starting rate limit for savings 5,000 5,000 Personal savings allowance (basic rate taxpayer) 1,000 1,000 Personal savings allowance (higher rate taxpayer) 500 500 Dividend ordinary rate 7.5% 7.5% Dividend upper rate 32.5% 32.5% Dividend additional rate 38.1% 38.1% Dividend allowance 2,000 2,000 SCOTTISH TAX RATES AND BANDS Starter rate 19% 19% Basic rate 20% 20% Intermediate rate 15/01/2021 16:45:17 - 598801 - 21% 27.139 21% Higher rate 41% 41% Top rate 46% 46% Starter rate limit 2,085 2,049 Basic rate limit 12,658 12,444 Intermediate rate limit 30,930 30,930 Higher rate limit 150,000 150,000 # These tax rates and bands apply only to the non-savings income of Scottish taxpayers 18% PERSONAL ALLOWANCES 2020-21 2019-20 Personal allowance 12,500 12,500 Marriage allowance 1 250 1,250 Blind person's allowance 2,500 2,450 Married couple's allowance: Born before 6 April 1935 9,075 8,915 Minimum amount 3510 3,450 Income limit for basic personal allowance 100,000 100,000 Income limit for married couple's allowance 21 16:45: 30 200 301 - 81 29,600 39 CAR AND FUEL BENEFIT 21 16:45:17 - 598801 - 81.97.27.139 Zero emissions 0% 16% *1-50 g/km (depending upon electric range) 2%-14% 16% *51g/km to 54g/km 15% *55g/km to 59g/km 16% *60g/km to 64g/km 17% *65g/km to 69g/km *70g/km to 74g/km 19% *75g/km 20% 51 g/km to 75g/km 19% 76g/km to 94g/km 22% 95g/km 23% Each additional 5g/km +1% +1% Maximum charge 37% 37% Amount used in car fuel benefit calculation 24,500 24,100 * These percentages 2% lower in 2020-21 if car registered on or after 6 April 2020 CAPITAL ALLOWANCES Writing Down Allowance (WDA) Main pool of plant and machinery 18% 18% Special rate pool of plant and machinery 6% 6% Annual Investment Allowance (AIA) 100% 100% AIA annual limit from 1 January 2016 200,000 200,000 First Year Allowances (FYAs) 100% 100% Structures and Buildings Allowances (SBA) 3% 2% AIA annual limit temporarily raised to Im between 1 January 2019 and 31 December 2020 PENSION SCHEMES Annual allowance 40,000 40,000 Lifetime allowance 1,073,100 1,055,000 2019-20 118 166 962 166 962 12% 2% 13.8% 3,000 National Insurance Contributions 2020-21 CLASS 1 Lower earnings limit (weekly) 120 Primary threshold (weekly) 1997.27.139 183 Upper earnings limit (weekly) 962 Seconday threshold (weekly) 169 Upper secondary threshold (weekly) 962 Employee contributions Rate on earnings between primary threshold and UEL 12% Rate on earnings beyond UEL 2% Employer contributions Rate on earnings beyond secondary threshold 13.8% Employment allowance 4,000 CLASS 1A Rate 13.8% CLASS 2 Weekly contribution 3.05 Small profits threshold 5:17 - 598801 - 81.97.27.139 6,475 CLASS 3 Weekly contribution 15.30 CLASS 4 Lower profits limit 9,500 Upper profits limit 50,000 Rate on profits between lower and upper limit Rate on profits beyond upper limit 2% 13.8% 3.00 6,365 15.00 9% 8,632 50,000 9% 29 10% Capital Gains Tax 2020-21 2019-20 Standard ratet 10% Higher ratet 20% 20% Business asset disposal relief rate 10% 10% Business asset disposal relief lifetime limit 1,000,000 10,000,000 Annual exempt amount 12,300 12,000 Taxable gains on the disposal of residential property are taxed at 18% and 28% Corporation Tax Financial Year FY2020 Main rate 19% Patent box (effective rate) 10% R&D SMEs payable credit 14.5% R&D expenditure credit 13% Note: The main rate for FY2021 will be 19%. FY2019 19% 10% 14 5% 12% FY2018 19% 10% 14.5% 12% FY2017 19% 10% 14.5% 11% FY2016 20% 10% 14.5% 11% Inheritance Tax Date of transfer Nil rate Rate on life- Rate Lower band time transfers on death rate 6 April 2006 to 5 April 2007 0-285,000 20% 40% 6 April 2007 to 5 April 2008/01/ 0-300,000 17 - 520% 1 - 81.940% 139 6 April 2008 to 5 April 2009 0 - 312,000 20% 40% 6 April 2009 to 5 April 2012 0 - 325,000 20% 40% 6 April 2012 to 5 April 2021 0 - 325,000 20% 40% 36% Note: The residence nil rate band for 2020-21 is 175,000. Value Added Tax Standard rate 20% (from 4 January 2011) Reduced rate 5% 5/01 Registration thresholdt..801 - 81.97.2 85.000 (from 1 April 2017) Deregistration thresholdt 83,000 (from 1 April 2017) + Thresholds frozen until April 2022 Question 3 Walter is a self-employed trader who prepares accounts to 31st March each year. He has no main or special rate pools at the start of the year to bring forward. His purchases of plant during the current year were as follows: 15 April 2020 20 August 2020 Bought machine Bought motor car (CO2 emissions 190g/km) 215,000 34,600 The car was for use by Walter and had 40% private use. Required Compute the Capital allowances which may be claimed for the year to 31st March 2021. Total: 5 marks