For 2019/20, the personal allowance is increased from £11,850 to £12,500 and the basic rate limit from £34,500 to £37,500, so that the level of income at which an individual comes within the change to income tax is extended from £46,350 in 2018/19 to £50,000 in 2019/20.
The 2019/20 figures will remain the same for 2020/21. After that they will rise with the annual increase in the Consumer Price Index.
The higher rate limit and the personal allowance income limit remain unchanged at £150,000 and £100,000 respectively for 2019/20. So for 2019/20 there will be no personal allowance available where adjusted net income exceeds £125,000
The basic, higher and additional rates are all unchanged, as are the rates on dividends and savings income. The dividend allowance, personal savings allowance, starting rate for savings and starting rate limit all stay at their 2018/19 levels.
The government has announced that for 2019/20 the basic rate band will be increased to £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance. The additional rate of tax of 45% remains payable on taxable income above £150,000.
The transferable tax allowance for married persons (aka the marriage allowance) automatically becomes £1,250 for 2019/20.
Other income tax personal reliefs are increased in line with inflation, as is the capital gains tax annual exempt amount which becomes £12,000 from 6 April 2019.
Rates of capital gains tax are unchanged, as are income tax rates for trustees.
Tax on savings income
Savings income is income such as bank and building society interest.
The Savings Allowance, which was first introduced for the 2016/17 tax year, applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.
National Living Wage (NLW) and National Minimum Wage (NMW)
Following the recommendations of the independent Low Pay Commission (LPC), the government will increase the NLW by 4.9% from £7.83 to £8.21 from April 2019.
The government will also accept all of the LPC’s recommendations for the other NMW rates to apply from April 2019, including increasing the rates for:
• 21 to 24 year olds by 4.3% from £7.38 to £7.70 per hour • 18 to 20 year olds by 4.2% from £5.90 to £6.15 per hour • 16 to 17 year olds by 3.6% from £4.20 to £4.35 per hour • apprentices by 5.4% from £3.70 to £3.90 per hour.
The government has announced that the amount that households with children and people with disabilities can earn before their Universal Credit award begins to be withdrawn – the Work Allowance – will be increased by £1,000 from April 2019.
In addition the government has listened to representations made by stakeholders on Universal Credit, and has announced a package of extra support for claimants as they make the transition to Universal Credit.