April Tax Changes 2019: Changes For You

With the commencement of 2019/20 tax year on 6th April 2019, it is important to be familiar with the amendments that will be applicable from April 2019. The article highlights the main amendments affecting businesses and individuals.

This article provides information on:

• Business rates relief
• Corporation tax, allowances and workplace pensions
• Company cars, vehicle and fuel benefit
• Income tax
• National Minimum Wage and National Living Wage rates
• Other personal tax reliefs and allowances
• Personal Tax and allowances
• Tax on shopping and services
• Student Loans

National Living Wage

The National Living Wage increased to £8.21 per hour. If an individual is aged 25 and more, and he/she is not in the initial first year of an apprenticeship, then the person is lawfully eligible to receive the National Living Wage. Individuals below 25 years of age and apprentices also get advantage from increasing Minimum Wage. The National Minimum Wage and National Living Wage rates are applicable all through the United Kingdom. The hourly proportion for the minimum wage is determined by the age of an individual, and whether he/she is an apprentice. An individual must be at least:

• School leaving age in order to receive the National Minimum Wage

  • In England, an individual can leave school on the last Friday in the month of June if a person will be 16, by the completion of the summer holidays

    • Until an individual is 18 years of age, he/she should either stay in full-time education or spend minimum 20 hours a week volunteering/working or start traineeship/apprenticeship
  • In Scotland, if an individual turn 16 years of age between 1 March and 30 September then he/she can leave school post 31st May of that year
  • In Wales, an individual can leave school on the last Friday in the month of June, if a person will be 16 by the completion of the summer holidays
  • In Northern Ireland, if an individual turns 16 during the school year (i.e. starting from 1 September until 1 July), he/she can leave school post 30th June
• Aged 25 in order to receive National Living Wage – the minimum wage will still be applicable for employees aged 24 and below

Current Rates

Below mentioned are the new rates for the National Minimum Wage and the National Living Wage – typically, these rates are altered every April

Previous Rates

Below mentioned are the rates from April 2016 until March 2019

Fuel Duty – Tax on Shopping and Services

Fuel Duty is encompassed in the price paid for diesel, petrol, and other fuels used in vehicles or for heating. UK citizens also pay typical rate Value Added Tax at 20% on most fuel, or the abridged rate of 5% for local heating fuel. The price paid for the fuel depends on the category of fuel

Personal Tax, Allowances and Thresholds

The amount earned by an individual prior to paying Income Tax is referred to as Personal Allowance. Beginning 6th April 2019, the Personal Allowance has been increases to £12,500 (from the previous £11,850) – the increase will result to a minor reduction in tax of £130 for each year for most people in the United Kingdom. The threshold for Higher Rate of income tax (i.e. 40%) has been increase to £50,000 (from the previous £46,350)

In order to make the most of tax efficacy, as a company Shareholder and Director, an organisation must pay wages of £8,632 and dividends to a maximum of £41,368 in the tax year 2019/20 – this assumes that there is no additional income and hence, the over-all personal tax bill will be equivalent to £2,662.50. If any amount, in excess of the amount mentioned, is taken as salary and dividends, then an individual will have to pay tax on the dividends at 32.5%

Scottish Income Tax

The Scottish Budget was pronouncement in Dec-18, and it announced a series of modifications for the tax year 2019/20 comprising of new bands and thresholds

Dividend Allowance

For 2019/20 tax year, the Dividend Allowance remains at £2,000. However, as stated above, the augmented tax thresholds mean that an individual can take more in dividends prior to paying the higher dividend tax rate

Company Vans, Company Cars, and Fuel Benefits

Starting 6th April 2019, tax rates pertaining to ‘benefit in kind’ (BiK) are augmented for company cars. The fraction applied to the list price of a car will upsurge based on the CO2 emissions printed by the Vehicle Certification Agency (VCA). HMRC provides a ready reckoner of appropriate percentage for calculating car benefit charge.

Company Cars and Vans

The tax paid on such reimbursements has been increased from 6th April 2019. The ‘benefits in kind’ is a fixed amount and for employees and directors, the changes are as follows:

• ‘Benefit in kind’ on company vans has increased to £3,430, from the previous £3,350
• ‘Benefit in kind’ on fuel for a van made available to an employee for personal use upsurges to £655, from the previous £633

Business Rates Relief

An individual can receive small business rate relief if:

• The rateable value of a property is not more than £15,000
• Only one property is used by the business

An individual will not be required to pay business rates if a property’s rateable value is £12,000 or less. For properties having rateable value of £12,001 to £15,000, the relief rate will go down progressively from 100% to 0%. For instance, if the rateable value is £13,500, an individual will receive 50% off on the bill. If rateable value is £14,000, he/she will get 33% off

Student Loans

Beginning 6th April 2019, the Department for Education has revised the earnings threshold before a student can start to pay back a student loan:

• Plan 1 loans increased to £18,935, from the previous £18,330
• Plan 2 loans increased to £25,725, from the previous £25,000

From 1 April 2019 to 31 March 2020, the multiplier for small business is 49.1p and the standard multiplier is 50.4p. The multipliers may vary in the City of London

Personal Pensions

The tax-free amount an individual can pay into his/her own pension remains at £40,000 for 2019/20 tax year. However, the lifetime allowance for pension savings increased to £1,055,000. From the previous £1,030,000

Corporation Tax

Corporation Tax to be paid on business earnings stays at 19%. The government is working towards decreasing this to 17% for the 2020/21 tax year (i.e. beginning 6th April 2020)

Workplace Pensions (auto-enrolment)

The minimum amount that a business is required to pay into an employee’s auto-enrolment workplace pension increased beginning 6th April 2019

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.