April marks the start of the new tax year, and all businesses and employees should ensure that they understand what has changed and how they will be affected.
The changes to this year’s tax rates were announced by Chancellor Phillip Hammond in the Autumn 2018 Budget and came into effect on April 6th2019.
Make sure that you are aware of these key changes and how they are likely to affect you.
The increase to the personal allowance means that you can now take home more money before you are required to pay tax. This tax year you can earn up to £12,500 before having to pay tax, compared to £11,850 last year.
Basic rate tax (at 20%) will be due on all earnings between £12,500 and £50,000 this tax year. Any earnings above the £50,000 threshold will be taxed higher rate tax (at 40%). This upper threshold has increased from £46,350 last year.
For those earning over £100,000, the tax-free allowance falls by £1 for every £2 over £100,000 that is earnt. Additional rate income tax (at 45%) is charged on all earnings over £150,000.
This increase to the personal allowance was initially planned for the 2020/2021 tax year but was brought forward a year, meaning that the allowance will stay the same next year.
Benefit in kind tax
Benefit in kind tax rates for company cars has increased this April. The percentage received is dependent on the vehicle’s CO2 emissions as published by the Vehicle Certification Agency.
Capital gains tax
The amount that individuals can earn before being required to pay capital gains tax has increased from £11,700 last year, to £12,000 for 2019/2020.
To be eligible for Entrepreneur’s relief, the minimum period that qualifying conditions must have been met for has been extended from 12 months to 24 months.
If you require more help or advice with any of the 2019/2020 tax changes then don’t hesitate to get in touch with our team of experts here at Michael Bell by giving us a call on 01484 690 730.