Last month saw the renewal of the UK tax year, and with that comes an array of new rates, thresholds and allowances. That’s why today, we’re here to help by breaking down any changes, both big and small, that might affect your personal and business finances this tax year.
Income tax thresholds have risen, with the amount you can earn per annum before paying income tax now capped at £12,500 (up from £11,850 in 2018). This means most people can look forward to a minor reduction of £130 in tax across the year, while high-earners with an annual income of over £50,000 will face the 40% higher rate tax (up from £46,350 in the previous year).
In Scotland, a whole range of changes to personal tax rates were announced following the Scottish Budget announcement back in December 2018. Primarily, this entailed the introduction of new tax bands and subsequent thresholds:
- Starter rate (19%): £12,500 – £14,549 PA (up from £11,850 – £13,850)
- Basic rate (20%): £14,550 – £24,944 PA (up from £13,851 – £24,000)
- Intermediate (21%): £24,945 – £43,430 PA (up from £24,001 – £44,273)
- Higher rate (41%): £43,431 – £150,000 PA (up from £44,274 – £150,000)
- Additional rate (46%): Over £150,000 (Same as previous year)
Benefits in kind (BIK) tax rates have increased as of 6th April, with taxable rates on company cars now being based on the levels of CO2 emissions emitted from the vehicle. HMRC has released this handy guide to help you work out what tax threshold your company vehicle falls under.
Elsewhere, taxation fees now apply to any personal fuel allowances on company vans at an increased rate as of April, with BIK on fuel for a van with personal use allowance rising to £3,430 (up from £3,350 in the previous tax year).
The new tax year brings good news for students, with The Department for Education confirming a rise in the repayment thresholds for all student loans:
- Plan 1 loan repayments will now commence once the loanee is earning £18,935 PA (up from £18,330)
- Plan 2 loan repayments will commence following a salary of £25,725 PA (up from £25,000 the previous year)
Workplace & personal pensions
The tax-free total you can pay into a personal pension remains at £40,000 each tax year, although the lifetime allowance for pension savings has now increased to £1,055,000 (up from £1,030,000).
In auto-enrolment workplace pension schemes, the minimum pay-in amount required has also increased. As of April, employer and employee contributions must be at least 8% of the employee’s qualifying salary.
Corporation tax (the payable rates on a business’s total profits) remains at 19% this year, however the UK government has announced plans to reduce this to 17% for the following 2020/21 tax year.
This comprehensive guide to financial changes this UK tax year will ensure you can stay on top of your outgoings and taxes, enabling you to sufficiently budget for all aspects of the year ahead. For additional budgeting tips and tricks, why not check out the rest of our blog?