With all the recent political upheaval it is easy to forget that we had a budget before Christmas and, with a new tax year upon us, it is a good time to remind ourselves of the key tax points arising for 2019/20.
Personal Tax
- Personal tax allowance rises to £12,500 (currently £11,850).It should be remembered this allowance is eroded for those with “adjusted net income” above £100,000.
- Higher rate (40%) tax threshold increases to £37,500 (currently £34,500) so when added to the Personal allowance an individual can have taxable income of up to £50,000 before suffering higher rates of tax.
- The additional rate of tax (45%) remains payable on taxable income above £150,000.
- The first £2,000 of dividend income remains taxed at 0%, with additional dividends within the taxpayers basic rate band taxed at 7.5%, and 32.5% for higher rate taxpayers.
- The Savings allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate. This is taken away entirely for additional rate taxpayers.
- The landlords Interest restriction continues to be phased in with only 25% of the finance cost fully allowable from April 2019.The remaining 75% obtains basic rate tax relief only.
- The National Living Wage increases from £7.83 to £8.21 per hour in April 2019.
Business Taxes
- Corporation tax rate remains at 19% but is due to fall to 17% in April 2020.
- The Annual Investment Allowance (AIA) relating to qualifying capital expenditure rose from £200,000 to £1m on 1 January 2019, and will be in place for two years.
- VAT registration threshold frozen at £85,000 until April 2020.
- From 1 April 2019 VAT registered businesses with a turnover above the VAT threshold must comply with Making Tax Digital (MTD).This means keeping digital records and submitting VAT Returns to HMRC using MTD compatible software.
Capital Taxes
- The Capital Gains Tax (CGT) annual exemption increases to £12,000 from £11,700.
- CGT rates remain at 10% within the basic rate band, and 20% thereafter, but with an 8% surcharge applying to certain gains in areas such as residential property.
- The Inheritance Tax (IHT) nil rate band remains frozen at £325,000 until April 2021.Interestingly it has been at this level since April 2009!
The above is by no means an exhaustive list and should you wish to discuss these, or any other matters please do not hesitate to contact a member of the Ensors team.
