With the UK experiencing its warmest February day on record last month, spring is in the air and with it comes a raft of tax changes for 2019/20.
Chancellor Philip Hammond revealed these back in December when announcing his Budget 2018, but there was an elephant in the Commons that day, and it’s one that continues to lurk – Brexit.
With an agreement yet to be reached over the UK’s exit from the EU, the Chancellor left the door open to revise these rates and allowances in next week’s Spring Statement.
“If the economic or fiscal outlook changes materially in-year,” said Hammond. “I will take whatever action is appropriate, including the right to upgrade the Spring Statement to a full fiscal event.”
So it goes without saying that the following rates and allowances set to come in for 2019/20 remain subject to change at the time of writing. Here’s what we know so far.
Income tax thresholds to rise
Hammond loosened the purse strings when announcing his intention to raise the personal allowance to £12,500 with effect from 6 April 2019.
As a result, the basic-rate threshold increases to £37,500, which means those who are entitled to a full personal allowance will not pay higher-rate tax until their income exceeds £50,000 in 2019/20.
There is a suspicion the Chancellor could renege on this generous promise, with the UK unable to reach an agreement over its exit from the EU.
Changes to personal finances
While the overall ISA allowance remains frozen at £20,000 a year, the only threshold to change for 2019/20 was the junior ISA.
Parents or other relations to the child can save up to £4,368 on behalf of a child from 6 April 2019, up from £4,260 in 2018/19.
Elsewhere, the pension lifetime allowance increases by £25,000 to £1.055 million and the capital gains annual allowance increases to £12,000 for individuals and to £6,000 for most trusts.
National living wage rates to increase
Employers will have to absorb an increase in costs, with the national living wage rates rising across the board from 1 April 2019.
From 6 April 2019, employees over the age of 25 will need to be paid at least £8.21 an hour, which equates to £16,009 a year if applied to the average working week of 37.5 hours.
Workers aged from 21 to 24 will see their minimum hourly wage rise to £7.70, with those aged 18 to 20 receiving at least £6.15 an hour.
Under-18s stand to receive £4.35 an hour, while apprentices who are under 19 and in the first year of their apprenticeships will get £3.90 an hour.
Our team of accountants can advise you throughout the new tax year. For more information, email us on firstname.lastname@example.org or call us on 01363 773191.