It’s been a while since the Chancellor announced his intention to loosen the purse strings and raise the higher-rate threshold, and that particular tax break is almost upon us.
While that headline measure could affect your personal finances if you’re a higher-rate taxpayer or on the threshold, a raft of other tax changes and new regimes are getting under way this month.
We take a look at five of the biggest tax changes coming in for the 2019/20 tax year, all of which take effect from April 2019.
1) Making Tax Digital for VAT
We’ve been talking about Making Tax Digital for a long time now, and the time has come for businesses turning over more than the VAT-registration threshold of £85,000 to comply.
Your VAT records and quarterly returns must be kept and filed using HMRC-approved digital software from 1 April 2019, although the first of those returns isn’t due until 7 August 2019.
It affects an estimated 2.2 million VAT-registered businesses in the UK, and fortunately we have our house in order. Speak to our specialists, Fiona or Amber, if you have any questions.
2) Personal allowance and higher-rate threshold
With the country bogged down by Brexit uncertainty, Chancellor Philip Hammond has delivered on his promise to raise the higher-rate threshold from £46,350 to £50,000.
At the same time, Hammond is increasing the personal allowance – on which you pay no tax below this threshold – from £11,850 to £12,500.
The increases provide an annual boost in income of £130 for basic-rate taxpayers and £860 for higher-rate taxpayers on earnings of up to £100,000.
3) Business rates
If you own an independent shop, pub, restaurant or café, such as those retailers on Gloucester Road, you may see your business rates reduced by a third.
As many as 90% of independent retailers with a rateable value of less than £51,000 in 2019/20 stand to benefit from the move, which could save them up to £8,000 a year.
However, the rates multiplier that applies to larger retail premises with a rateable value of more than £51,000 in England will rise above 50p for the first time.
4) Residence nil-rate band
The family home allowance, or residence nil-rate band as it is otherwise known, is an inheritance tax break that sits on top of the existing nil-rate band of £325,000.
First introduced for 2017/18, it enables you or a loved one to pass on the family home to direct descendants up to a value of £150,000 in 2019/20.
So, it’s possible for family homes worth up to £475,000 in 2019/20 to be passed on to children or grandchildren without being liable for inheritance tax.
5) Workplace pensions
As explained in our previous blog on auto-enrolment, minimum contributions into workplace pensions go up 5% to 8% on 6 April 2019.
This applies to workers earning more than £10,000 a year, and are aged between 22 and state pension age.
If you’re an employer, you will need to match at least 3% of their wages from now on, while your payroll provider needs to increase contributions from eligible employees to a minimum of 5%.
Director Mike Dunkley handles our auto-enrolment service. To find out more, or for other enquiries, call us on 01454 619900 or email us at advice@dunkleys.accountants