The latest income tax guidance for 2020 is out and we’ve put together a guide to help you sort through it.
The main points from the 2020 Income Tax Notice (ITN) are:1.
The top rate of Income Tax will be £1,600 for all income, including dividends and capital gains.2.
Dividends will only be taxed on their face value (up to £6,000)3.
You can only deduct a maximum of £6 million worth of income from the first £5,000 of income4.
You’ll have to report any dividends or capital gains as income, even if they’re declared as a capital gain or dividend5.
You have to pay Capital Gains Tax on income above £6.5 million6.
The threshold for claiming Capital Gays Tax is £50,000.7.
You must declare income from any business that earns more than £1 million a year.8.
The maximum amount of income that you can claim for Capital Gifts Tax is a maximum amount each year of £50 million.9.
Capital gains tax will be imposed on any income over £50m in 2020.10.
If you’re married, you can deduct up to £3,500 from the income of your spouse each year.
If your partner is married and you are single, you must deduct an amount of £3.5m from each income from your partner each year in 2020.(Image: Getty Images)What’s more, if you live together, you will only have to claim Capital Gives Tax on a joint return, rather than a single return.
You’re free to claim this tax in any year if you have any children or dependants who are not your spouse.
You are also allowed to claim any other tax benefits available to single people including tax-free savings accounts.
You will have to declare any income you receive from the business you live in.
This will vary from business to business.
For example, if your business earns £1m a year, you may be able to claim a deduction from your income for the year only if you make a contribution of £1 from your taxable income.
Your partner will have more control over your tax treatment.
The ITN is a draft tax policy that will be reviewed periodically by HMRC.
The final tax document is due in March 2021.