Tax, wage, benefits & pension changes you need to know about for 2020
As the new year rolls in, it is accompanied by numerous changes in tax, wages, benefits and pensions. This article will discuss these proposed changes and help you to become clearer about how you might take advantage of them this year.
Minimum wage rise – April
There is an expectation that a new £8.67 an hour rate will be announced for those aged 25 and over. New hourly rates are generally announced in the Autumn budget, but this has been delayed until 11 March due to Brexit extensions and the general election.
Inheritance tax breaks – April 6th
From April you will be able to pass on more wealth pre-tax. Inheritance tax breaks will hit £175,000 this year for people who own a home. This means that including the standard nil rate band, a couple can leave a £1million property entirely tax free to a child, grandchild or step children or grandchildren.
Landlord tax breaks axed
Previously interest paid on related loan could be deducted from earnings, so you paid less tax. From April we will see that cut to 20%.
Second home owners face higher taxes – April
Three big changes have been made:
- Many sellers will lose the ‘lettings relief’ tax break. Currently you receive capital gains tax relief up to £40,000 per person but this will only apply to landlords actually living in the property with their tenants.
- Private residence relief is the law that any increase in the property’s value in the 18 months before sale is not counted for capital gains, this is being reduced to 9 months.
- You will have to pay any capital gains you owe more quickly. Rather than by the end of the January in the following tax year, from April you will have to pay the tax due within 30 days.
The government promised to change NI insurance thresholds. With the new plans you would pay nothing on the first £9,500 of your earnings, working out at about £100 a year of savings. You need 35 years of qualifying NICs to receive the full state pension.
State pension rise
State pension payouts are set to rise by 3.9% in April. It’s not certain but this expected announcement was delayed in the budget as well.
Council tax to rise
Local authorities will receive the power to raise council tax by up to 2% in April. Keep an eye on your local authority to see how the changes will affect you and your home.
State pension age rising to 66 – October
From October you will need to be at least 66 to receive your state pension which is non-dependent on gender. This is not the last rise that we will see, as the government has plans to increase this further over the years.
If you have any questions at all regarding the proposed changes that are expected this year, please do get in touch with our Tax Partner, Robin Stevenson who will be able to advise and guide you on the best course of action for you.
Robin Stevenson - Tax Partner
Tel: 01825 763 366
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