2019/20 tax year: 10 Things You Need To Know

New tax year in UK brings a raft of tax changes that you simply can’t afford to ignore as they all come into force in the coming months.

We have provided some of 10 key changes and the proposed implementation dates.

  1. National Living Wage will increase to £8.21

From April 2019 the National Living Wage for those aged 25 and over will increase from £7.83 per hour to £8.21.

  1. Tax-free personal allowance will rise £12,500

The personal allowance – the amount you earn before you start paying income tax – will rise from £11,850 to £12,500 from April 2019.

  1. Income Tax bands of taxable income will rise

 

Band

Tax rate

Taxable Income 2019-20

Taxable Income 2018-19

Personal Allowance

0%

Up to £12,500

Up to £11, 850

Basic rate

20%

£12,501 to £37,500

£11, 851 to £36,350

Higher rate

40%

£37501 to £150,000

£36,351 to £150,000

Additional rate

45%

Over £150,000

Over £150,000
  1. Pension contribution will rise for automatic enrolment pensions

By law, under automatic enrolment, minimum pension contributions are required to increase over time on set dates. Beginning on 6 April 2019, the total amount of minimum contribution for employers will rise from 5% to 8%. 

  1. Main rate of National Insurance contributions (NICs) for the self-employed will increase

Currently, the self-employed may have to pay both Class 4 and Class 2 NICs:

Class 4 NICs at 9% are paid on profits, will rise from £8,424 to £8,632.

Class 2 NICs are paid on profits of £6,364 or more, will rise from £2.95 to £3.00.

  1. Tax-free dividend allowance will not change

The dividend allowance will remain at £2,000.

  1. Corporation tax will not change

Corporation tax main rate will remain at 19%.

  1. VAT registration and deregistration thresholds will not change for 2 years

VAT registration and deregistration thresholds will remain at the current level of £85,000 for a further 2 years until April 2022.

  1. Making Tax Digital for VAT

VAT-registered businesses with a taxable turnover above the VAT threshold are required to use the Making Tax Digital service to keep records digitally and use software to submit their VAT returns from 1 April 2019. 

  1. The Annual Investment Allowance will increase to £1 million from 1 January 2019 to 31 December 2020

The government will increase the Annual Investment Allowance from £200,000 to £1 million for all qualifying investment in plant and machinery made on or after 1 January 2019 until 31 December 2020, to help businesses to invest and grow.

More information you can find on GOV.UK

Tax tax MTD national insurance employer self-employed

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By Diana Hurta
28 Feb 2019
@DianaHurta

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