The 2019/20 tax year kicked off on 6 April 2019, and with it comes a wave of changes you need to know about. We’ve summed up the most important updates below to ensure you’re prepared for the new tax year.
- Income tax – the amount you can earn before you need to pay basic rate tax at 20% - also known as a ‘personal allowance’ - has increased from £11,850 to £12,500. If you’re a higher rate tax payer (40%), the amount you can earn has increased from £46,350 to £50,000 before the higher rate kicks in.
- ISAs – the amount you can save tax-free in an Individual Savings Account (ISA) remains at £20,000 for the 2019/20 tax year. This includes cash ISAs and stocks and shares ISAs.
- Tax reliefs and allowances
- Capital gains tax: this is a tax you pay on the profit you make when you sell something that has increased in value. The tax-free allowance has increased from £11,700 to £12,000.
- Annual allowance: the amount you can pay into your pension while still receiving tax relief remains at £40,000.
- Lifetime allowance: this is the limit on the amount of pension benefit you can draw from pension schemes (lump sum or retirement income), and can be paid without triggering an extra tax charge. This has increased from £1.03 million to £1.055 million for the 2019/20 tax year
- Auto-enrolment minimum contributions – the employer minimum contribution has increased to 3%, staff contribution to 5%, which means the total minimum contribution is now 8%.
What do I need to do?
We previously talked about preparing for the new tax year, the top three allowances you need to consider maximising, and how best to plan for disinvesting. But the beginning of a new tax year could mean checking in with your adviser if you already have one, or seeking financial advice to ensure you’re fully informed about how the 2019/20 tax year changes could affect you or your business.
A qualified financial adviser will assess your situation and make recommendations based on your circumstances. AFH advisers are independent, which means we take a whole-of-market approach to provide solutions tailored specifically to you. You should always seek professional advice before taking any course of action.
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