Are you aware of the new year tax changes for the 6th April 2019?
With the new tax year comes new changes to tax rates and thresholds that you should be aware of. Here is our summary of the most important changes coming into play from the 6th of April 2019, that will be useful for businesses and employees / self-employed alike.
For the 2019/20 financial year the tax-free personal allowance will increase by £650 to £12,500. The basic and higher rate tax bands will also change. The basic band for 2019/20 is from £12,501 - £50,000 and will require you to pay a rate of 20%. The higher band is to be set at £50,001 - £150,000 with a rate of 40%. The additional rate will remain at £150,001 and will require 45% tax on your earnings. The bands are applied to any income that is classed as ‘non-savings’ and ‘non-dividend.’
National Insurance Contributions
National Insurance contributions are also changing. The Class 1 NICs threshold will rise to £8,632 from £8,424. If you earn under £50,000 you will contribute 12% of your earnings towards this. For income above this amount and extra 2% will be required.
The dividend allowance for the 2019/20 tax year remains at £2,000. However, as outlined above the increased tax thresholds mean that you can take more in dividends before paying the higher dividend tax rate.
National Minimum Wage & National Living Wage
From the first of April 2019 both the National Minimum Wage & National Living Wage amounts will increase. The minimum hourly rate depends on the age and status of the employee or apprentice:
|AGE / POSITION||25 Years +||21 - 24||18 - 20||Under 18||Apprentice|
|1st April 2019||£8.21||£7.70||£6.15||£4.35||£3.90|
Company cars, vans & fuel benefit:
- From the 6th April 2019 benefit in kind tax rates are increasing for company cars with the percentage applied to the list price of the car increasing based on the CO2 emissions published by the vehicle certification agency.
- When a company pays for fuel that has been used personally or allows personal use of a company van, it is a benefit in kind. These charges only apply if fuel is provided for personal use.
- The tax paid on these benefits is being increased from the 6th of April 2019. The benefit in kind is a fixed amount for vans and the changes are as follows for directors & employees:
- Benefit in kind on company vans increases to £3,430 from £3,350
- Benefit in kind on fuel for a van provided for personal use increases to £655 (from £633)
Capital Gains Tax
The capital gains tax annual exempt amount for individuals increases from £11,700 to £12,000
Corporation tax remains constant on business profits at 19% however there are plans to reduce this to 17% for the 2020 / 21 tax year.
The minimum amount you will need to pay into your employee’s auto-enrolment workplace pension increases form 6th April 2019. The total amount of employer and employee contributions must be a minimum of 8% of your employee’s qualifying earnings.
If you have any questions or would like to understand how you can make your business or personal affairs more tax efficient please get in touch with our Tax Partner, Robin Stevenson using the contact details below.
Robin Stevenson - Tax Partner
Tel: 01825 763 366
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