2019/20 tax year: personal tax rate changes and allowances

A roundup of all the personal tax changes which come into force from the 2019/20 tax year including, an increase to the personal allowance and higher rate threshold, changes to residential inheritance tax and capital gains tax regime for non-UK residents

Personal allowance and higher rate threshold

The personal allowance increases on 6 April 2019 to £12,500 from £11,850. This will lead to a reduction in tax of £130 a year for most people. The threshold for paying the higher rate of income tax (which is 40%) will increase to £50,000 from £46,350.

Income tax rates

UK and Northern Ireland

Scotland – Scottish rate of income tax (SRIT)

Wales

Other Allowances


*Available to persons born before 6 April 1935. Relief limited to 10%. Reduced to minimum allowance by £1 for every £2 over income limit. Minimum allowance reduced by £1 for every £2 income over £100,000 after applying personal allowance reduction.

Inheritance Tax

Disguised remuneration loan charge

The deadline for settling loan charges with HMRC is 5 April 2019. In April 2019, all outstanding loans from disguised remuneration schemes will become subject to an income tax and national insurance contributions (NICs) charge under Income Tax (Earnings and Pensions) Act 2003 ITEPA 2003, Pt 7A. The loan charge is an anti-avoidance measure which targets the payment of remuneration in a form (in this case, as a loan) that avoids tax and NIC.

The new loan charge was introduced by Finance (No. 2) Act 2017 on all disguised remuneration loans, eg, loans made via company employee benefit trusts (EBTs) or EBT sub-trusts, or similar via employer-financed retirement benefits scheme (EFRBS) made on or after 6 April 1999 and still outstanding at 5 April 2019.

Pensions, loans and savings

Student loans

The Department for Education has confirmed that from 6 April 2019 the Plan 1 threshold increases to £18,935 from £18,330 and the Plan 2 threshold to £25,725 from £25,000 but the rate of deduction for both remains 9%.

Individual savings accounts (ISAs)

From 1 April there will be a small adjustment to the annual Child Trust Fund and Junior ISA savings limit with a £108 rise from £4,260 to £4,368 from 6 April 2019, equivalent to 2.5%. The interest and gains received on money saved in a CTF and Junior ISA is tax free as per standard ISA rules.

An estimated 907,000 Junior ISAs were paid into during 2017-18 tax year.

Personal pensions

The tax-free amount you can pay into a personal pension remains at £40,000 per tax year. The lifetime allowance for pension savings increases from 6 April 2019 to £1,055,000 (from £1,030,000)

Workplace pensions

The minimum amount you need to pay into your employee’s auto-enrolment workplace pension increases from 6 April 2019. This means the total amount of employer and employee contributions must be a minimum of 8% of your employee’s qualifying earnings.

Capital gains tax

The capital gains tax (CGT) annual exempt amount for individuals increases to £12,000 from £11,700.

Non-resident CGT

Non-UK residents will be pulled into the capital gains tax CGT regime for the first time on 6 April if they dispose of UK land and property.

Currently, non-UK residents are only taxed on disposals of residential property, but from 6 April 2019, all UK land (including commercial property) will come within the scope of UK taxation.

In addition, non-UK residents will also be subject to UK tax on the disposal of assets that derive at least 75% of its value from UK land, so called ‘property-rich’ companies.

With the new CGT regime, a new compliance system is being introduced, which non-UK residents will have to follow in reporting disposals of UK land and paying the associated tax.

Non-UK residents disposing of UK land (or assets that derive at least 75% of its value from UK land) must file a return within 30 days following the completion of the disposal, and a payment on account must be made at the same time.

The amount of tax to be paid is calculated under the normal rules, including using any allowable losses at the date of disposal.

Property tax

Interest relief for buy to let mortgages

Since April 2017, the government has phased in the removal of interest for buy to let landlords. Now in the fourth year of implementation, the restriction will be fully in place from 6 April 2020.

The finance costs that will be restricted include interest on mortgages, loans - including loans to buy furnishings and overdrafts.

Stamp duty land tax (SDLT) – UK and Northern Ireland

Residential

Non-residential

SDLT: first-time buyers

Residential only


SDLT rate effective from 22/11/17 for purchases by first time buyers only

Scotland – Land and Building Transaction Tax (LBTT)

LBTT rates and bands for residential and non-residential property transactions

Wales – Land Transaction Tax (LTT)


These rates came into force on 6 April 2018.

Cars

Company cars

From 6 April 2019, benefit in kind (BiK) tax rates are increasing for company cars. The percentage applied to the list price of the car will increase based on the CO2 emissions published by the Vehicle Certification Agency.

Tax free mileage allowances

The following rates will remain the same from 6 April 2019:

National Insurance Contributions (NICs)

Class 1 NICs

Employees

Employers

- Class 1A and Class 1B – 13.8%
- Class 2 (self-employed) – Flat rate £3 a week. Small profits threshold £6,365 a year.
- Class 3 (voluntary contributions) - £15 a week.
- Class 4 (self-employed) – 9% of profits between £8,632 and £50,000 a year. 2% of profits above £50,000 a year.

Source: Accountancy Daily - Report by Amy Austin.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

HMRC call centre connection times deteriorate

One in five taxpayers are not satisfied with HMRC’s digital services despite the tax authority’s push to move all services online, while wait times to speak to an adviser worsened in February with nearly a third of callers waiting more than 10 minutes to speak to an adviser

At the same time, call centre response times have worsened this month, with the average speed of answering a call worsening from five minutes 14 seconds to six minutes, 27 seconds, well above HMRC’s target five-minute waiting time. This is nowhere near the performance in 2015-16 when average answer times were 12 minutes but HMRC did work to improve this with substantial investment in technology, automated call services and more call centre staff to improve response times.

However, although taxpayers are getting through to the service, they face longer waits to actually speak to an adviser as response times only illustrate time waiting to reach the automated service. Nearly a third of callers – 29% - have to wait more than 10 minutes to speak to an HMRC official, which is nearly double the number waiting this long in 2017-18. The call wait worsened significantly in February, up from 19.8% to 29% of taxpayers waiting more than 10 minutes, compared with HMRC’s target connection time of five minutes.

Pressures of Brexit queries and Making Tax Digital implementation dates have contributed to the deterioration in service as the tax authority has been reassigning staff to Brexit transition and no deal planning and preparation.

An HMRC spokesperson told Accountancy Daily: ‘Over the past 12 months, the average wait times for our helplines have been around our target of five minutes. We know that at busy times some customers have to wait longer, and we are doing all we can to keep all waiting times as low as possible.

Despite the push to online services, HMRC is still having to deal with large volumes of post and is falling well behind its target of dealing with 80% of post within 15 days of receipt. It received more than one million items of post in February for which customers require a response.

HMRC dealt with 64.8% of customer post within 15 days, leaving over 300,000 letters unanswered.

Despite the level of dissatisfaction with digital services, there has been good take-up of personal tax accounts, HMRC reported.

While company registration for Making Tax Digital for VAT has been slow with the majority of companies required to report VAT digitally still not registered, there has been strong interest in HMRC’s digital tax accounts with nearly half of taxpayers now signed up for the service.

The number of individuals signing up for personal tax accounts has hit 18.8m, up nearly 25% on the same time last year when total number stood at 14.7m, out of 30.3m UK wide taxpayers. Digital tax accounts were first launched in 2015 and are optional for taxpayers; each account amalgamates records for taxpayers including tax and NICs from different employment sources and income streams.

‘The numbers of customers using our digital services continues to increase, and we carry on improving these services in line with customer feedback,’ HMRC added.

Source: Accountancy Daily - Report by Sara White.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

HMRC sends late filing penalties earlier than expected

The Association of Taxation Technicians (ATT) is alerting taxpayers that HMRC is starting to issue late filing penalties for self-assessment income tax returns this week

The penalty for missing the filing deadline of 31 January 2019 for a 2017/18 return is £100.

HMRC announced in February 2019 that, due to Brexit-related pressures, the issue of late filing penalty notices would be delayed.

At the time HMRC said that individuals who filed late will still be charged the penalty; but the notice would be delivered later than normal. It will still issue daily penalties to individuals who have still not filed three months after the deadline, in appropriate cases, at the normal time.

Previously, ATT raised concerns about the delay, pointing out that the £100 penalty notice is an important prompt to taxpayers that their return is outstanding as well as reminding them that they risk incurring an additional penalty of £10 per day if the return is still outstanding after three months from the 31 January due date.

ATT was concerned that if the penalty notices were not received until late April or into May, the £10 daily penalties will be unavoidable.

Jon Stride, co-chair of the ATT’s technical steering group, said: ‘The ATT is pleased that HMRC have now started to issue penalty notices and have not delayed the exercise to the end of April, which was originally a possibility. However, it will take HMRC until 12 April 2019 to issue all the penalty letters. This gives taxpayers a little over two weeks to submit their return before the daily penalty regime commences.

‘Anyone who has yet to file their 2017/18 tax return should do so as a matter of urgency. They will not be able to avoid the £100 penalty unless they have a reasonable excuse for being late, but getting the return filed online by no later than 30 April 2019 will mean that they will avoid the additional £10 per day.’

Source: Accountancy Daily - Report by Amy Austin.

Are you aware that you can keep up to date with the latest developments and news using our new mobile application. Download for Android and iPhone.

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…

National Insurance – Employment Allowance 2015/16

For those businesses who operate a PAYE scheme & met certain criteria for the 2014/15 tax year would have meant they qualified for a National Insurance ‘Employment Allowance’ of £2,000.

The good news is that the £2,000 ‘Employment Allowance’ remains available for the forthcoming 2015/16 tax year.

If businesses want to continue to claim it, there will be no need to apply the ‘Yes’ marker on their EPS ‘Employment Payment Summary’ as this will automatically roll forward.

However, if the business forgot to make a claim for the 2014/15 ‘Employment Allowance’ & they still meet the relevant criteria, then they have four years after the end of the tax year in which the allowance applies to make a claim. For example, if a business wants to make an ‘Employment Allowance’ claim for the 2014/15 tax year, then they will have until 5 April 2019 to do so. The claim is essentially a correction to the previous ‘Employment Payment Summary’ submission for that year, so a business can send in a revised EPS return with the correct ‘Yes’ marker applied for the tax year they wish to claim for.

Another aspect of the ‘Employment Allowance’ scheme would be that if a business had more than one PAYE scheme & was unable to utilise all of the £2,000 allowance available against their nominated PAYE scheme, then they can apply to HMRC for a repayment of any unutilised balances. The unutilised balance will be the lesser of £2,000 or the total Employers’ National Insurance for all their associated PAYE schemes, less the allowance already given against their chosen scheme.

For more information on the above &/or our Payroll services we provide, please visit our Payroll Bureau services page.

If you require assistance with obtaining a refund from HMRC regarding the ‘National Insurance Employment Allowance’ &/or to check eligibility if you can make the claim for the allowance in the first instance then please contact us & we’ll be happy to help…

Please note that Emerald Accountants Limited shall not be liable for any loss or damage arising out of the use of any of the information disclosed in this article…