2019/20 Changes to Personal Tax and How It Could Save You Money

16th May 2019

With the new tax year in full swing, we set out below some of the changes to various allowances and tax bands that affect how much tax you are paying:

  • The personal allowance (the amount you can earn before you begin paying tax) has increased from £11,850 to £12,500.
  • The basic rate tax band has been increased, meaning you will not begin paying higher rate tax at 40% until you earn over £50,000
  • You can earn up to £166 per week before Class 1 national insurance contributions are due, after which employees pay national insurance at 12% on income between £166 and £962, and 2% thereafter.
  • When disposing of an asset, gains below £12,000 will fall within the annual exemption and will therefore not be taxable; an increase from £11,700 last year.

Please note; if you are a resident in Scotland, the tax threshold will differ following changes introduced in 2018/19.

It is also positive to note that there have been no changes to the personal savings allowance or dividend allowances from 5 April 2019 (amounting to up to £1,000 of interest and £2,000 dividends tax free).

Example: Financial impact on the amount of tax you could pay

Claire, a vet, earned £48,000 in 2018/19 and is expecting to earn the same again in 2019/20. Below shows the change in her expected tax liability taking into consideration the above changes:

  2019/20   2018/19
  £   £
Employment income 48,000   48,000
Personal allowance (12,500)   (11,850)
Taxable income 35,500   36,150
       
       
Basic rate tax at 20%

(£37,500 in 19/20, £34,500 in 18/19)

 

7,100   6,900
Higher rate tax at 40%

 

    660
Total income tax due 7,100   7,560

 

Although Claire’s  income has remained consistent year on year, Claire will pay £460 less tax in 2019/20.

If you have any questions on how the 2019/20 tax changes affect you, please contact us here: https://www.whitingandpartners.co.uk/about-us/contact-us/



 
Other items in Blogs
 
Lisa Smith
29th September 2020 Extension to deferment of VAT due

On 24 September 2020 the Chancellor announced and extension to scheme allowing for the deferment of VAT for businesses affected by Corona Virus.  Businesses that took advantage of the arrangements to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021, will have the option to pay the outstanding amounts…

Read More »

Chris Kelly
25th September 2020 COVID-19 Business Support – Winter Economy Plan

  With the Autumn Budget cancelled the Chancellor has announced a Winter Economy Plan introducing a package of measures to support businesses.   The highlights are:   The Coronavirus Jobs Retention Scheme (CJRS) – Will end as planned on 31 October 2020.   A new Job Support Scheme – To support viable UK employers who…

Read More »

Steven Denton
25th September 2020 HMRC Job Support Scheme (JSS)

On 24th September the government announced the launching in November of the Job Support Scheme to replace the existing Furlough Scheme that is feted to end on 31st October. The JSS is to run from 1st November through to 30th April, but initial rules may be amended after three months.   To qualify for the…

Read More »

Matilda Mawson
25th September 2020 2019/20 Pension Savings Statement – Request yours today!

  If you have made contributions to a registered pension scheme of more than £40,000 in the tax year, your scheme administrator should automatically send you a pension savings statement by 6 October 2020. This will detail your total pension input for the 2019/20 tax year as well as your pension input for the 3…

Read More »

Ian Piper
24th September 2020 Corporation Tax due soon: Not necessarily.

Companies with 31 December 2019 year ends will be due to pay their corporation tax on 1 October 2020. If that company is expecting to suffer a loss during the 2020 financial year, perhaps due to COVID-19 related reasons, it should be possible to carry that loss back one year and claim a refund of…

Read More »

Ruth Pearson
17th September 2020 Fuel Rates From September 2020

HMRC have updated the latest company car advisory fuel rates. These rates apply from 1 September 2020.   The guidance states that you can use either the previous or current rates, for up to one month from the date the new rules apply.   The new rates per mile are below: Engine size Petrol LPG…

Read More »