As the 2020/2021 tax year commences, we take a look at the changes that came into play as of 6 April 2020…
Inheritance tax
If you’re passing your home to a direct descendant, you could benefit from an increase of £25,000 (or £50,000 if you’re a couple) in your tax-free allowance. This below table shows the increase on the nil-rate band between the last tax year and the current.
| Tax year | Nil-rate band | Residence nil-rate band | Total for individuals | Total for couples |
| 2019/2020 | £325,000 | £150,000 | £475,000 | £950,000 |
| 2020/2021 | £325,000 | £175,000 | £500,000 | £1,000,000 |
Pension lifetime allowance
Your lifetime allowance determines the amount you can pay into you pension free of tax. In the tax year 2020/2021 it has increased £18,100 in line with the rate of inflation.
| Tax year | Lifetime pensions allowance |
| 2019/2020 | £1,055,000 |
| 2020/2021 | £1,073,100 |
ISAs
Your annual ISA allowance for the tax year 2020/2021 remains at £20,000. This means you can earn interest completely tax-free up to the £20,000 threshold.
Young savers have benefited from a substantial raise in the allowance for the Junior ISA which for the tax year 202/2021 now sits at £9,000.
| Tax year | Junior ISA allowance |
| 2019/2020 | £4,368 |
| 2020/2021 | £9,000 |
Further infotmation of 2020/2021 tax allowances can be founds at www.gov.uk/browse/tax/.
Tax treatment depends on your individual circumstances and may be subject to change. As we’re unable to provide any personal advice on tax issues, should you have any queries regarding your tax position or liability, we recommend contacting your local tax office or an independent financial advisor.