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As always, the new tax year brought a number of changes. And as a limited company director, it’s likely that some of these changes will impact you directly. To help get you up to speed, we’ve put together a rundown with some of the new changes.
The 2020/21 tax year will see the personal allowance remain unchanged from the previous tax year at £12,500.
If you pay yourself in dividends through your limited company, the allowance is remaining at £2,000. This means you’ll get to earn £2,000 as dividends before paying tax. Beyond this, you’ll pay tax on dividends at 7.5% if you’re a basic rate taxpayer, 32.5% for a higher rate, and 38.1% for an additional rate.
You can discover more about your dividends in our guide here.
The earning thresholds for student loan repayments have also increased as follows:
Plan 1 has increased from £18,935 to £19,390.
Plan 2 has increased from £25,725 to £26,575.
The lifetime allowance has increased from £1,055,000 to £1,073,100.
There’s a lot to take in when the new tax year rolls around and getting your finances in order isn’t always easy. As your accounting partner, our resources hub is here to help you with all you need to know about contracting, from tax and insurance, starting up and everything in between.
Visit our free resources hub to find out more.