2019/20 tax year: personal tax rate changes and allowances

A roundup of all the personal tax changes which come into force from the 2019/20 tax year including, an increase to the personal allowance and higher rate threshold, changes to residential inheritance tax and capital gains tax regime for non-UK residents

Personal allowance and higher rate threshold

The personal allowance increases on 6 April 2019 to £12,500 from £11,850. This will lead to a reduction in tax of £130 a year for most people. The threshold for paying the higher rate of income tax (which is 40%) will increase to £50,000 from £46,350.

Income tax rates

UK and Northern Ireland

RateRange
Basic20%£1 – £37,500
Higher40%£37,501 – £150,000
Additional45%Over £150,000

 

Scotland – Scottish rate of income tax (SRIT)

RateRange
Starter19%£1 – £2,049
Basic20%£2,050 – £12,444
Intermediate21%£12,445 – £30,930
Higher41%£30,931 – £150,000
Top46%Over £150,000

 

Wales

RateRange
Basic20%£1 – £37,500
Higher40%£37,501 – £150,000
Additional45%Over £150,000

 

Other allowances

Income tax allowances2019/202018/19
Married/civil partners allowance*£8,915£8,695
Minimum married/civil partners allowance*£3,450£3,360
Married/civil partners transferable allowance£1,250£1,190
Income limit for married/civil partners allowance£29,600£28,900
Blind persons allowance£2,450£2,390

*Available to persons born before 6 April 1935. Relief limited to 10%. Reduced to minimum allowance by £1 for every £2 over income limit. Minimum allowance reduced by £1 for every £2 income over £100,000 after applying personal allowance reduction.

 

Inheritance tax

2019/202018/19
Nil-rate band£325,000£325,000
Residence nil-rate band£150,000£125,000
Rate of tax on excess40%40%
Chargeable lifetime transfers20%20%

 

Disguised remuneration loan charge

The deadline for settling loan charges with HMRC is 5 April 2019. In April 2019, all outstanding loans from disguised remuneration schemes will become subject to an income tax and national insurance contributions (NICs) charge under Income Tax (Earnings and Pensions) Act 2003 ITEPA 2003, Pt 7A. The loan charge is an anti-avoidance measure which targets the payment of remuneration in a form (in this case, as a loan) that avoids tax and NIC.

The new loan charge was introduced by Finance (No. 2) Act 2017 on all disguised remuneration loans, eg, loans made via company employee benefit trusts (EBTs) or EBT sub-trusts, or similar via employer-financed retirement benefits scheme (EFRBS) made on or after 6 April 1999 and still outstanding at 5 April 2019.

 

Pensions, loans and savings

Student loans

The Department for Education has confirmed that from 6 April 2019 the Plan 1 threshold increases to £18,935 from £18,330 and the Plan 2 threshold to £25,725 from £25,000 but the rate of deduction for both remains 9%.

Individual savings accounts (ISAs)

From 1 April there will be a small adjustment to the annual Child Trust Fund and Junior ISA savings limit with a £108 rise from £4,260 to £4,368 from 6 April 2019, equivalent to 2.5%. The interest and gains received on money saved in a CTF and Junior ISA is tax free as per standard ISA rules.

An estimated 907,000 Junior ISAs were paid into during 2017-18 tax year.

Limits2019/202018/19
Annual limit£20,000£20,000
Junior ISA annual limit£4,368£4,260
Lifetime ISA annual limit£4,000£4,000
Help to Buy ISA monthly limit£200£200

The Help to Buy ISA is only available to 30 November 2019.

 

Personal pensions

The tax-free amount you can pay into a personal pension remains at £40,000 per tax year. The lifetime allowance for pension savings increases from 6 April 2019 to £1,055,000 (from £1,030,000)

Workplace pensions

The minimum amount you need to pay into your employee’s auto-enrolment workplace pension increases from 6 April 2019. This means the total amount of employer and employee contributions must be a minimum of 8% of your employee’s qualifying earnings.

Date effectiveTotal minimum contributionEmployer minimum contributionStaff contribute the remainder
Current5%2%Up to 3%
6 Apr 198%3%Up to 5%

 

Capital gains tax

The capital gains tax (CGT) annual exempt amount for individuals increases to £12,000 from £11,700.

Non-resident CGT

Non-UK residents will be pulled into the capital gains tax CGT regime for the first time on 6 April if they dispose of UK land and property.

Currently, non-UK residents are only taxed on disposals of residential property, but from 6 April 2019, all UK land (including commercial property) will come within the scope of UK taxation.

In addition, non-UK residents will also be subject to UK tax on the disposal of assets that derive at least 75% of its value from UK land, so called ‘property-rich’ companies.

With the new CGT regime, a new compliance system is being introduced, which non-UK residents will have to follow in reporting disposals of UK land and paying the associated tax.

Non-UK residents disposing of UK land (or assets that derive at least 75% of its value from UK land) must file a return within 30 days following the completion of the disposal, and a payment on account must be made at the same time.

The amount of tax to be paid is calculated under the normal rules, including using any allowable losses at the date of disposal.

Property tax

Interest relief for buy to let mortgages

Since April 2017, the government has phased in the removal of interest for buy to let landlords. Now in the fourth year of implementation, the restriction will be fully in place from 6 April 2020.

The finance costs that will be restricted include interest on mortgages, loans – including loans to buy furnishings and overdrafts.

Tax yearPercentage of finance costs deductible from rental incomePercentage of basic rate tax reduction
2019/2025%75%
2020/210%100%

 

Stamp duty land tax (SDLT) – UK and Northern Ireland

Residential

£0 – £125,0000%
£125,001 – £250,0002%
£250,001 – £925,0005%
£925,001 – £1.5m10%
Over £1.5m12%

 

Non-residential

£0 – £150,0000%
£150,001 – £250,0002%
Over £250,0005%

 

SDLT: first-time buyers

Residential only

Share of sale priceCurrent SDLT %First-time buyers %
≤ £125k00
>£125k-£250k20
>£250k-£300k50
>£300-£500k55

SDLT rate effective from 22/11/17 for purchases by first time buyers only

 

Scotland – Land and Building Transaction Tax (LBTT)

LBTT rates and bands for residential and non-residential property transactions

Residential transactionsNon-residential transactionsNon-residential leases
Purchase priceLBTT ratePurchase priceLBTT rateNet present value of rent payableLBTT rate
Up to £145,0000%Up to £150,0000%Up to £150,0000%
£145,001

to £250,000

2%£150,001 to £250,0001%Over £150,0001%
£250,001

to £325,000

5%Over £250,0005%
£325,001

to £750,000

10%
Over £750,00012%

 

Wales – Land Transaction Tax (LTT)

Price thresholdLTT rate
£0 – £180,0000%
£180,001 – £250,0003.5%
£250, 001 – £400,0005%
£400,001 – £750,0007.5%
£750,001 – £1.5m10%
Over £1.5m12%

These rates came into force on 6 April 2018.

 

Cars

Company cars

From 6 April 2019, benefit in kind (BiK) tax rates are increasing for company cars. The percentage applied to the list price of the car will increase based on the CO2 emissions published by the Vehicle Certification Agency.

CO2 emissions 2019/20% of list price
g/kmpetroldiesel
0-501620
51-751923
76-942226
95-992327
100-1042428
105-1092529
110-1142630
115-1192731
120-1242832
125-1292933
130-1343034
135-1393135
140-1443236
145-1493337
150-1543437
155-1593537
160-1643637
165 or more3737

 

Tax free mileage allowances

First 10,000 milesOver 10,000 miles
Car / van45p25p
Motorcycle24p24p
Bicycle20p20p

 

The following rates will remain the same from 6 April 2019:

National Insurance Contributions (NICs)

Class 1 NICs

Employees

Weekly earnings
First £166Nil
£166.01 – £96212%
Over £9622%

 

Employers

Weekly earnings
First £166Nil
Over £16613.80%

 

  • Class 1A and Class 1B – 13.8%
  • Class 2 (self-employed) – Flat rate £3 a week. Small profits threshold £6,365 a year.
  • Class 3 (voluntary contributions) – £15 a week.
  • Class 4 (self-employed) – 9% of profits between £8,632 and £50,000 a year. 2% of profits above £50,000 a year.
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