2019/20 Changes to Personal Tax and How It Could Save You Money

With the new tax year in full swing, we set out below some of the changes to various allowances and tax bands that affect how much tax you are paying:

• The personal allowance (the amount you can earn before you begin paying tax) has increased from £11,850 to £12,500.
• The basic rate tax band has been increased, meaning you will not begin paying higher rate tax at 40% until you earn over £50,000
• You can earn up to £166 per week before Class 1 national insurance contributions are due, after which employees pay national insurance at 12% on income between £166 and £962, and 2% thereafter.
• When disposing of an asset, gains below £12,000 will fall within the annual exemption and will therefore not be taxable; an increase from £11,700 last year.

Please note; if you are a resident in Scotland, the tax threshold will differ following changes introduced in 2018/19.

It is also positive to note that there have been no changes to the personal savings allowance or dividend allowances from 5 April 2019 (amounting to up to £1,000 of interest and £2,000 dividends tax free).

Example: Financial impact on the amount of tax you could pay

Claire, a vet, earned £48,000 in 2018/19 and is expecting to earn the same again in 2019/20. Below shows the change in her expected tax liability taking into consideration the above changes:

Although Claire’s  income has remained consistent year on year, Claire will pay £460 less tax in 2019/20.

If you have any questions on how the 2019/20 tax changes affect you, please contact us here: https://www.whitingsllp.co.uk/about-us/contact-us/

Disclaimer - All information in this post was correct at time of writing.