Personal Tax Planning - 10 Changes for 2019-20
10 April 2019
With the new tax year commencing on 6th April 2019, we’ve listed some of the changes that may affect you over the coming year.
The Personal Allowance – the amount you can earn before paying Income Tax – increased on 6th April 2019 to £12,500 (from £11,850). This equates to a small tax saving of around £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).
The annual Dividend Allowance remains at £2,000 for 2019/20 which, when added to the Personal Allowance of £12,500, means that the maximum tax-free income you can receive through Dividends is £14,500.
If you have any questions about how best to take income and dividends from your company, speak to us and we can give you tailored advice.
From 6th April 2019, Benefit in Kind (BiK) tax rates increased for company cars. The percentage applied to the list price of the car increases based on the CO2 emissions published by the Vehicle Certification Agency. Click on HMRC for more information on calculating your company car and fuel taxes.
When your company pays for fuel you have used personally or allows personal use of a company van, it is a Benefit in Kind. The tax paid is being increased from 6th April 2019. The BiK is a fixed amount for vans and the changes are as follows for directors and employees:
- The BiK on company vans increases to £3,430 (from £3,350)
- The BiK on fuel for a van provided for personal use increases to £655 (from £633).
The fuel benefit calculation for cars is a little more complex. Get in touch with us if you want more information.
Student Loan Threshold Increase
The Department for Education has confirmed that from 6th April 2019 the earnings threshold before you start to repay a student loan as follows:
- Plan 1 loans will rise to £18,935 (from £18,330)
- Plan 2 loans will rise to £25,725 (from £25,000).
Remember, if you are a director being paid salary and dividends from your company, and you are paying back a student loan, the threshold for repayment is based on your total income.
If you run a payroll for any employees who have student loan deductions, you need to ensure you have a record of what type of loan they have, so that the correct deductions are made.
Postgraduate Master’s Loan and Postgraduate Doctoral Loan
A Postgraduate Master’s Loan is a new type of loan introduced by the government to help with course fees and living costs while you study a postgraduate master’s course. The repayment of your Postgraduate Loan is treated the same as any other Student Loan and Interest is charged from the day you get the first payment.
Repayment will be at 6% for students in England & Wales on income above £21,000 but at 9% for Scottish and Northern Ireland students with income above £18,330.
While 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 6th April 2019 to £1,055,000 (from £1,030,000).
Capital Gains Tax
The Capital Gains Tax annual exempt amount for individuals increases to £12,000 (from £11,700).
From 6th April 2019, the minimum period throughout which the qualifying conditions for Entrepreneurs’ Relief must be met will be extended from 12-months to 24-months.
Workplace Pensions (auto-enrolment)
The minimum amount you need to pay into your employee’s auto-enrolment workplace pension increases from 6th April 2019. This means the total amount of employer and employee contributions must be a minimum of 8% of your employee’s qualifying earnings – 3% from Employer, 5% from Employee.
Inheritance Tax & the Family Home
No inheritance tax is due from your estate if you die and leave your home to your spouse/civil partner in 2019/20. If it is passed on to a child or grandchild, it will be subject to inheritance tax if its value is above the £325,000 threshold at the date of death.
The Residence Nil-Rate Band allowance increased to £150,000 in April 2019 and may be available to your direct descendants. It is added on top of the £325,000 nil-rate band which may mean you could pass on the family home worth up to £475000 - £950,000 if you are married or in a civil partnership without your estate being liable for inheritance tax.
There are certain conditions which must be met so get in touch if you want to discuss your inheritance tax queries.