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New Tax Year New Changes In 2019/20

The 5th of April has landed again but what has changed from tax year 2018/19?

Personal tax allowances

Personal allowance has increased to £12,500 from £11,850. This means you will now earn £12,500 before paying income tax. This is an approximate saving of £130 per year.

The basic rate tax band has increased to £50,000 from £46,350. Therefore if you fall into this category you will be taxed at 20%.

Dividends in the basic rate band will be taxed at 7.5% and at 32.5% at the higher rate, as last year. With the dividend allowance of £2,000 also remaining untouched.

The tax free amount which can be paid into a personal pension remains at £40,000.

The Capital Gains Tax annual exempt amount has increased by £300 to £12,000.

National minimum and living wage increases

Year25 years +21 to 24 years18 to 20 yearsUnder 18 yearsApprentice
Current£7.83£7.38£5.90£4.20£3.70
1st April 2019£8.21£7.70£6.15£4.35£3.90

Corporation tax

Corporation tax remains at 19% however the government plan to reduce this to 17% from tax year 20/21.

The Annual Investment Allowance (AIA) increased to £1million on 1 January 2019.

Company vehicles

When you use a company vehicle for personal use this triggers a benefit n kind (BIK) tax charge.

  • 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).

BIK charge for company cars in more complex. If you use a company vehicle for personal use you should speak to your accountant.

ISAs

The tax free amount which you can put into an ISA each year will remain at £20,000. This includes Cash ISAs Stocks and Shares.

You are also eligible to invest £4,000 each year in a lifetime ISA (LISA) which can be used to fund your first home purchase. You get a 25% bonus each year on all funds which you invest.

Making tax digital

Last but not least Making Tax Digital (MTD) dropped on 1 April 2019. Businesses with turnover above the VAT threshold of £85,000 are now required to keep digital records and submit VAT returns to HMRC digitally.

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