Personal and self-employed taxation updates

The new tax year starts on 6th April when the following changes will come into effect:

General and employee tax and NI changes for 2019/20

•           The personal allowance (the amount that someone can be paid before being liable for tax) will increase from £11,850 to £12,500

•           The threshold for the taper on the allowance continues to be £100,000 (personal allowance decreases by £1 for every £1,000 above that) so that those earning £125,000 or above receive no personal allowance

•           The threshold for higher rate tax has increased to £50,000 (£12,500 tax free + £37,500) from £46,350, whilst that for additional tax remains unchanged at earnings above £150,000

•           The rates of basic, higher and additional tax remain at 20%, 40% and 45% respectively

•           Class 1 National Insurance thresholds have increased

•           Employer and employee NI contribution rates remain unchanged

(Source: Crunch, 20th February 2019)

Self-employed and service company tax and NI changes

In relation to the self-employed (or those with service companies) the following will apply from 6th April 2019:

•           The Dividend Allowance (the amount of dividend people can take before paying tax) will remain at £2,000 a year.

•           Tax thresholds are universal (see above).

•           Tax rates on dividends remain at 7.5%, 32.5% and 38.1% for basic, higher and additional tax payers respectively.

•           Class 2 NI has still not been abolished as planned and the rate for 2019/20 has increased from £2.95 to £3 per week.

•           The thresholds for Class 4 NI contributions have increased slightly.

•           Class 4 NI contribution rates remain unchanged.

(Source: Crunch, 20th February 2019)