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Personal Tax Rate Changes and Allowances From April 2019

Personal Allowance and Higher Rate Threshold

There will be an increase in the personal tax allowance starting 6th April 2019, as it moves from £11,850 up to £12,500 and giving a typical tax reduction of £130. The higher rate tax band of income tax (40%) rises from £46,350 to £50,000.

Income Tax Rates (for income after £12,500 personal allowance)

UK and Northern Ireland

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

Pensions, Loans, and Savings

Student Loans

From 6th April 2019, the Department of Education has stated that there will be an increase in the Plan 1 threshold from £18,330 to £18,935. The Plan 2 threshold will also increase from £25,000 to £25,725. The rate of deduction for both plans will be kept at 9%. Student loan deductions will not be made by the employer until these thresholds are breached by the employee and deductions are only rendered on income earned above these limits.

Personal Pensions

There is no change on the tax-free amount (£40,000 per tax year) that can be paid into a personal pension. Whereas there is an increase on the lifetime allowance from £1,030,000 up to £1,055,000 starting 6th April  2019.

Workplace Pensions

An increase will occur from 6th April 2019 on the minimum amount needed to pay into an employee’s auto-enrolment workplace pension scheme. It is now required that the total amount of employer and employee contributions is a minimum of 8% of the employee’s earnings.

Capital Gains Tax

With an increase of £300, the capital gains tax (CGT) annual exempt amount for individuals changes from £11,700 to £12,000. An individual can therefore receive capital gains of £12,000 before any capital gains tax (either at 18% or 28% depending on other income) is paid.

The following rates will remain the same from 6th 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.

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