The start of the new tax year falls on 6th April each year and brings with it a new set of rules and allowances.
Now the 2019/20 tax year is underway, here is a useful summary of the new allowances that are now in place.
- The Capital Gains Tax annual exempt amount increases in line with the Consumer Price Index from £11,700 for individuals to £12,000.
- The Personal Allowance – the amount you can earn before paying income tax – has increased to £12,500 for 2019/20, from £11,850 previously, meaning an extra £130 tax free income for the typical basic rate taxpayer.
- The higher rate threshold has also been increased – to £50,000.
- Scottish taxpayers have different rates from those in England and Wales. These are as follows:
Starter rate – 19% – from £12,500-£14,549
Basic rate – 20% – from £14,549-£24,944
Intermediate rate – 21% – from £24,944-£43,430
Higher rate – 41% – from £43,430-£150,000
Additional rate – 46% – from £150,000
- Those who own a home will face less inheritance tax (IHT) when passing it on to their ‘direct descendants’ as the next staged increase in the Residence Nil Rate Band (RNRB) kicks in. The additional exemption for main properties, which was introduced in April 2017, has increased from £125,000 to £150,000. NB. There is no increase in the main exemption – the first £325,000 of any estate. The increase to the RNRB takes the total available tax-free allowance to £475,000 per individual, or £950,000 between a married couple/civil partners.
- The Pension Lifetime Allowance – the most you can have in a pension pot without potentially suffering a tax charge on any excess – has increased from £1,030,000 to £1,055,000.
- The Junior ISA limit will increase from £4,260 to £4,368. All other ISA limits stay the same.
For further help in relation to any of the above changes or advice specific to your circumstances, please contact us.
NB: The Financial Conduct Authority does not regulate tax planning.
This guide represents our understanding of law and HM Revenue & Customs practice as at 6/04/2019