6 tax changes for 2019/20
5th April 2019
The first quarter of 2019 has flashed by and several tax changes are poised to take effect for the 2019/20 tax year, which gets under way on 6 April 2019.
It’s staggering to think that Brexit continues to unsettle business owners, some of whom have also had to handle the change towards digital accounts.
Fortunately, there is good news as far as personal finances are concerned with increases to the personal allowance and the higher-rate threshold being welcomed.
Here’s what we can expect for 2019/20.
Personal allowance and higher-rate threshold
The headline-grabbing measure surrounds the personal allowance increasing to £12,500, while the higher-rate threshold rises to £50,000.
There is a little controversy surrounding the latter, as taxpayers earning £50,000 a year outside of Scotland will be £1,544 – or £128 a month – better off than those up north in 2019/29.
Making Tax Digital for VAT
It’s official: VAT-registered businesses have entered into a new era that requires VAT reports to be submitted digitally, and all VAT records to be collated in the same format.
Most of the remaining firms with taxable turnover of more than £85,000 in 2019/20 will follow suit in the next two months, with the first reports filed by 7 August 2019.
Residence nil-rate band
The family home allowance, or residence nil-rate band to use its other name, provides an inheritance tax break that works on top of the existing £325,000 nil-rate band.
The £100,000 introductory rate, first introduced in April 2017, has increased by £25,000 a year ever since to the point it can add £150,000 on top of the nil-rate band in 2019/20.
Therefore, it’s possible to pass on the family home worth up to £475,000 to direct descendants free from inheritance tax this year – or £950,000 for married couples and civil partners.
VAT reverse charge for construction companies
One tax change that flew under the radar for some surrounds a new VAT reverse charge for construction businesses, which comes into effect on 1 October 2019.
This reverse charge puts the onus on customers who buy supplies or construction services to account for VAT and report it to HMRC, instead of the supplier.
Auto-enrolment in 2019/20
If you employ someone aged between 22 and state pension age, and pay them more than £10,000 a year, your minimum contributions towards their workplace pension have risen from 2% to 3%.
For workers who fall into this category, their minimum contributions have also increased – from 5% to 8% for 2019/20.
This is the last planned auto-enrolment increase since the scheme launched in October 2012.
National minimum and living wage
For those aged 25 and over, the national living wage will be increased from £7.83 to £8.21 per hour for 2019/20.
The national minimum wage rates will also increase as follows:
- apprentices: £3.90 per hour
- under-18s: £4.35 per hour
- 18 to 20-year-olds: £6.15 per hour
- 21 to 24-year-olds: £7.70 per hour.
Get in touch
We’re happy to discuss your personal or business finances for the year ahead. Contact us on 0117 973 3377 or email us at email@example.com to find out more.
Despite our recent merger with Burnside Chartered Accountants, you will still be able to communicate with us using these details.