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
 
Ruth Pearson
17th October 2019 Is it too early to talk about Christmas!

In December 2018 HMRC wrote to employers to advise of a temporary easement on reporting PAYE information in real time. This was for a number of reasons, one of which could be due to businesses closing over the Christmas period and therefore having to pay staff earlier than normal.   HMRC have received feedback from…

Read More »

Chris Kelly
8th October 2019 Whiting & Partners advises Lettings Agency on finding its new Home

Whiting & Partners, The Corporate Finance Network’s representative firm in Suffolk has advised a well-established lettings agent on its sale to a national group.   The Whiting & Partners Corporate Finance team were approached by their client when they decided to explore opportunities to sell their agency. The team, led by Corporate Finance Partner, Chris…

Read More »

Matilda Mawson
2nd October 2019 Class 2 National Insurance – HMRC’s ongoing issues

July 2015 saw the end of direct debit collection for Class 2 National Insurance. Contributions are now collected through self-assessment and, despite there being 4 years since the change in the way payments are made, HMRC are still having teething problems. The issues arise as HMRC are running two computer systems side by side: national…

Read More »

Ian Piper
1st October 2019 New Off-Payroll Working Tax Rules: Y/N?

Readers, particularly knowledge based contractors working through their own personal service companies, will hopefully now be familiar with the new ‘off-payroll working’ tax rules being introduced in the private sector on 1 April 2020. These are being introduced as part of the Government’s general strategy over recent years to eliminate tax avoidance, tax evasion, and…

Read More »

Richard Alecock
12th September 2019 “Get ready for Brexit” workshops

  The Department for International Trade is hosting “Get ready for Brexit” workshops across the East region, each running from 11:30 – 13:30 followed by a networking lunch.   Please see the link below for dates and venues.   http://x.email.ukti.gov.uk/ats/msg.aspx?sg1=6a523609b267f7129747b384f8f21e3e

Read More »

Steven Denton
10th September 2019 Employer allowance – is it worth the hassle?

The £3000.00 employer allowance ceases at the end of the current tax year. From April 2020 employers will have to re-apply for a di minimis state aid based allowance.   A new HMRC checklist will have to completed to declare the following;   NIC contributions in the previous tax year were beneath £100,000; Confirmation that…

Read More »