Changes for the new tax year
As 5th April rolls around again, it brings with it the annual adjustments to various rates and allowances for tax. The changes taking place from 6th April 2019 are as follows
The personal allowance is the amount you can earn before paying any tax at all. This is increasing to £11,850 from £11,500.
Basic Rate Band
This is the amount of income above the personal allowance on which you pay tax at 20%. This is increasing to £34,500 from £33,500. Combined with the personal allowance, this means that you can now earn £46,350 before you will become liable for higher rate tax.
Higher and additional rate tax
Above the basic rate band, income starts to be taxed at the 40% higher rate. When total income reaches £150,000 this increases to the 45% additional tax rate. The level of income required to trigger the additional rate is the same as in the prior year.
Reduction in personal allowance
Once income exceeds £100,000, the personal allowance will be reduced. The reduction is a loss of £1 of personal allowance for every £2 of income above £100,000. The same procedure applied in the previous tax year, but the increase in the personal allowance means your income now needs to be £123,700 before the personal allowance is completely lost.
The amount of dividends you can receive before they start being taxed remains unchanged at £2,000.
Similarly, the amount of interest you can receive before paying any tax is still £1,000. Those on low incomes (below £16,850) are also entitled to a starting rate of 0% on interest. The maximum amount available is also being kept at £5,000. The available amount is reduced by £1 for every £1 of non-interest income an individual has above the personal allowance.
Capital gains exempt amount
The capital gains exempt amount is the amount of capital gains you can make in a year before paying any capital gains tax. Whilst the amount due on any gains above this amount will depend on your other income, this allowance is otherwise separate from other allowances. The exempt amount is increasing to £12,000 from £11,700.