Blog Post

Changes for the New Tax Year 2020-21


The new tax year 2020-21 commenced on 6th April 2020 with changes to tax allowances, thresholds, business rates and more. The measures announced in the Spring Budget that were designed to help businesses cope with the effects of COVID-19 are also now being implemented.

We’ve rounded up some of the most important changes for businesses in 2020/21 and more information can be found on the HRMC website.

Personal Tax Allowances and Thresholds

The amount you are allowed to earn each year before paying tax, also known as the Personal Tax Allowance remains the same in the new 2020-21 tax year at £12,500. The higher rate income tax threshold also stays the same at £50,000.

For directors who also pay themselves in dividends, the dividend allowance remains at £2000.

The National Minimum Wage

The National Minimum Wage is the minimum pay per hour that almost all workers are entitled to by law. The minimum wage rates applied from 1st April 2020 are as follows

Category of workerHourly Rate
Aged 25 & above (national living wage rate)£8.72
Aged 21 to 24 inclusive£8.20
Aged 18 to 20 inclusive£6.45
Aged under 18 (but above compulsory school leaving age)£4.55
Apprentices aged under 19£4.15
Apprentices aged 19 and over, but in the first year of their apprenticeship£4.15


To check if you’re paying your workers the National Minimum Wage or to see f you owe them payments from previous years, use the National Minimum Wage calculator.


Benefit in Kind – Company cars & Fuel taxes

Benefit in Kind tax rates have increased for the new tax year 2020-21, affecting the amount of tax owed on company cars. The percentage of tax owed is based on the CO2 emissions published by the Vehicle Certification Agency and HMRC has created a ready reckoner to help you calculate your company car tax.

The amount of tax owed on fuel or company vehicles used for personal use has also increased in the new tax year. For vans, the BiK rate is a fixed charge as follows;

  • The Benefit in Kind rate on company vans goes up to £3,490 (from £3,430)
  • The Benefit in Kind rate on fuel for a van provided for personal use increases from £655 to £666.

The tax on free fuel provided by an employer for use in a company car has also risen. This amount is calculated and fixed on the cash equivalent of the benefit each tax year; the fixed amount has gone up from £24,100 to £24,500 for the tax year 2020-21.

Business Rates

As mentioned in the Spring Budget, to help businesses struggling with the effects of coronavirus, businesses in the retail, leisure and hospitality sectors working from a property with a rateable value of less than £51,000 will not have to pay any business rates in the year 2020-21.

For pubs, the discount they are eligible to receive on their business rates will increase from £1,000 to £5,000 as long as their rateable value is below £100,000.


Whatever the new tax year brings for your business, using Sage 50cloud Accounts will help you to keep on top of your finances. Contact us to get started with Sage accounting software to manage your business accounts.

Related Posts

Tried and Tested Marketing Tips for SME’s

In the current economic climate, marketing your small business is more important than ever.

Is it time to upgrade from spreadsheets to a CRM system?

The effects of the Coronavirus distancing measures have been tough on businesses large and

Marketing Packages
Marketing Packages for Act! Growth Suite Users

Put your Act! Software to use with our marketing packages The Act! Growth Suite has

Remote Sage Training
Save Over 30% on Remote Sage Training Courses

Remote Sage Training Sessions Investing in your skills is a great way to help your

Keep Marketing Through Coronavirus

With the Coronavirus crisis affecting businesses across the UK many SME owners are understandably

Working from Home: Tech and Tools to Keep Your Business Running

With more business moving to home working to combat the effects of the COVID-19

Spring Budget 2020
Spring Budget 2020 to help UK’s Small Businesses

The Spring Budget, delivered by new Chancellor Rishi Sunak on 11th March 2020, contained

Making Tax Digital Phase 2

In April 2019, HMRC launched the first phase of Making Tax Digital, which affected thousands of

Important Financial Dates for the Year 2020-21 to Add to Your Calendar

As a self-employed business owner or an employer, it can be difficult to juggle

Email Marketing Reporting
Is it working? How to measure your email marketing campaigns

Email marketing is one of the most effective forms of digital marketing and is

Softext Partners with Tamworth Charity, Number Eight

Softext Ltd is pleased to announce that we have partnered with local charity Number

Email marketing: How to build your email list
Lead Generation: Building Your Email Marketing List

Email marketing is one of the most effective forms of marketing, but you need

What is sender reputation and how can you manage it?

Email marketing is one of the best ways to reach your customers, with the

Self Assessment: A short guide for small businesses

January is a time to think about the goals and challenges you want to

Christmas Opening Hours

During the festive period our office is closed from 1pm on 24th December and

What’s New in Act! Version 22?

The long-awaited Act! Version 22 has finally been released, bringing with it a host

Add-Ons To Improve Your Act! CRM Experience

Act! is the number one CRM and marketing tool for SME’s around the world. Act!

Swiftpage expands its Act! portfolio with the new Act! Growth Suite

Swiftpage has recently announced that it will be retiring former legacy Act! plans as it expands

CIS Domestic Reverse Charge Delay

On Friday 6th September, HMRC responded to pressure from the construction sector by delaying its CIS

What’s NEW with Act! V17

This month sees the release of the New Act! V17. This article is going

Sage Training London

Sage Training London (North London) – Official Sage Training Centre Get the skills and knowledge

Softext new branding and new website. What does everybody think?

Hello We have recently gone through a re brand process and a complete new design