- 29th March 2019
- Posted by: Suzy Hill
- Category: Personal Tax, Business News
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
|Basic||20%||£1 – £37,500|
|Higher||40%||£37,501 – £150,000|
Scotland – Scottish rate of income tax (SRIT)
|Starter||19%||£1 – £2,049|
|Basic||20%||£2,050 – £12,444|
|Intermediate||21%||£12,445 – £30,930|
|Higher||41%||£30,931 – £150,000|
|Basic||20%||£1 – £37,500|
|Higher||40%||£37,501 – £150,000|
|Income tax allowances||2019/20||2018/19|
|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.
|Residence nil-rate band||£150,000||£125,000|
|Rate of tax on excess||40%||40%|
|Chargeable lifetime transfers||20%||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
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.
|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.
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)
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.
Capital gains tax
The capital gains tax (CGT) annual exempt amount for individuals increases to £12,000 from £11,700.
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.
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 year||Percentage of finance costs deductible from rental income||Percentage of basic rate tax reduction|
Stamp duty land tax (SDLT) – UK and Northern Ireland
|£0 – £125,000||0%|
|£125,001 – £250,000||2%|
|£250,001 – £925,000||5%|
|£925,001 – £1.5m||10%|
|£0 – £150,000||0%|
|£150,001 – £250,000||2%|
SDLT: first-time buyers
|Share of sale price||Current SDLT %||First-time buyers %|
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 transactions||Non-residential transactions||Non-residential leases|
|Purchase price||LBTT rate||Purchase price||LBTT rate||Net present value of rent payable||LBTT rate|
|Up to £145,000||0%||Up to £150,000||0%||Up to £150,000||0%|
|2%||£150,001 to £250,000||1%||Over £150,000||1%|
Wales – Land Transaction Tax (LTT)
|Price threshold||LTT rate|
|£0 – £180,000||0%|
|£180,001 – £250,000||3.5%|
|£250, 001 – £400,000||5%|
|£400,001 – £750,000||7.5%|
|£750,001 – £1.5m||10%|
These rates came into force on 6 April 2018.
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|
|165 or more||37||37|
Tax free mileage allowances
|First 10,000 miles||Over 10,000 miles|
|Car / van||45p||25p|
The following rates will remain the same from 6 April 2019:
National Insurance Contributions (NICs)
Class 1 NICs
|£166.01 – £962||12%|
- 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.