When moving to new tax year 2019-20, please take a note of the following changes below:

1) Global Tax Code uplifted to 1250L
2) Income Tax Rates and Bandwidth
3) Auto Enrolment Minimum Contribution Rates
4) Statutory Payment Rates
5) Student Loan Rates
6) Postgraduate Loan Deductions
7) Company Car Fuel Rates.
8) National Minimum Wage
9) National Insurance contributions.

1) Global Tax Code uplifted to 1250L

Employee Personal allowance increased from £11,850 to £12,500 for the tax year 2019-20. HMRC have announced a general ‘uplift’ of all tax codes with ‘L’ suffix by 65. The employee with tax code 1185L in 2018-19 will have their tax code uplifted to 1250L from 6 April 2019.

Tax Codes (UK)

Emergency Tax Code 1250L
L Suffix Uplift 65
M Suffix Uplift 71
N Suffix Uplift 59

Click here for more information.

2) Income Tax Rates and Bandwidth

Personal allowance increased from £11,850 to £12,500 for the tax year 2019-20. The new threshold for PAYE is £240 per week (£1,042 per month). Below are the income tax rates and bandwidth for UK and Scotland that will come into effect from 6th April 2019.

UK Rate of Income Tax:
Table below shows the changes to UK rate of income tax bandwidths from 6 April 2019.

UK Rate % Bandwidth
Basic Rate 20% £1 to £37,500
Higher Rate 40% £37,501 to £150,000
Additional Rate 45% £150,001 and above

Note: The amounts below assume the full Personal Allowance is used by the individual.


2018/191

2019/201
Basic rate – The lowest level of income tax paid above the personal allowance.20% on earnings between £11851 and £46,3501 (you pay tax on £34,500) 20% on earnings between £12,501 and £50,0001 (you pay tax on £37,500)
Higher rate – The middle tier of income tax.40% on earnings between £46,351 and £150,000140% on earnings between £50,001 and £150,0001
Additional rate – The top rate of income tax for high earners.45% on earnings above £150,0001 45% on earnings above £150,0001

Dividend tax rates

There is no change to dividend tax rates in 2019/20:

  • The tax-free dividend allowance is £2,000
  • Basic-rate taxpayers pay 7.5% on dividends
  • Higher-rate taxpayers pay 32.5% on dividends
  • Additional-rate taxpayers pay 38.1% on dividends.

Self-employed National Insurance contributions


2018/19

2019/20
Small profits threshold
Earnings below this threshold incur no NICs.
£6,205 £6,365
Class 2 NICs
for those earning above the Small profits threshold
£2.95 per week £3.00 per week
Lower Profits Limit
Earnings up to this limit incur only Class 2 NICs.
Over this limit incurs Class 4 NICs.
£8,424 £8,632
Upper Profits Limit
Earnings up to this limit incur:Class 2 NICsClass 4 NICs at 9% of the profit between the Lower Profits Limit and Upper Profits Limit.
£46,350£50,000
Earnings above the Upper Profits Limit
Any earnings above this limit incur:Class 2 NICsClass 4 NICs at 9% of the profit between the Lower Profits Limit and Upper Profits LimitClass 4 NICs at 2% of the profit above the Upper Profits Limit.
Over £46,350 Over £50,00

Scottish Rate of Income Tax:
Table below shows the changes to Scottish rate of income tax bandwidths from 6 April 2018.

Scottish Rate % Bandwidth
Starter Rate 19% £1 to £2,049
Basic Rate 20% £2,050 to £12,444
Intermediate Rate 21% £12,445 to £30,930
Higher Rate 41% £30,931 to £150,000
Top Rate 46% £150,001 and above

Welsh Rate of Income Tax:
From 6 April 2019 onward, HMRC is introducing new Welsh rate of Income tax. The Welsh tax payers will be subjected to pay tax based on the new Welsh bandwidths. Our system will be automatically updated with the new income tax band changes from the start of the new tax year. Table below shows the changes to Welsh rate of income tax bandwidths from 6 April 2019.

Welsh Rate % Bandwidth
Basic Rate 20% £1 to £37,500
Higher Rate 40% £37,501 to £150,000
Additional Rate 45% £150,001 and above

Click here for more information.

3) Auto Enrolment Minimum Contribution Rates

From 6th April 2019, the minimum contribution rates for auto enrolment pension will increase. Our system will automatically update the minimum percentage contribution rates to meet the new increased rates for both employee and employer from the day (6th April 2019) the new rates become effective

DateEmployer Minimum contributionEmployee Minimum contributionTotal Minimum contribution
New rate: 6th April 2019 onward 3% 5% 8%
Current rate: 6th April 2018 – 5th April 2019 2% 3% 5%

Click here for more information.

4) Statutory Payment Rates

The Small Employer’s Relief threshold (£45,000) and recovery rate (3%) remain unchanged for 2019-20, as does the standard recovery rate (92%). Statutory payment rate (weekly) for the tax year 2019 are shown in the table below.

Statutory Sick Pay (Weekly)
£94.25
Statutory Maternity Pay (Weekly) £148.68
Statutory Paternity Pay (Weekly) £148.68
Statutory Adoption Pay (Weekly) £148.68
Statutory Shared Parental Pay (Weekly) £148.68

Click here for more information.

5) Student Loan Rates

From 6 April 2018 onward student loan threshold for
1. Plan 1 will increase from £ 18,330 to £18,935 per year
2. Plan 2 will increase from £25,000 to £25,725 per year

Only thresholds are different for both the plans but the calculation method and deduction rate (9%) remains the same.

Click here for more information.

6) Post graduate loan deductions

The post graduate loan deduction is the new feature in the Payroll process from April 2019. Employee earnings threshold for Postgraduate loan £21,000 per year and the Postgraduate loan deduction rate is 6%. You will be notified through the DPS about updates from HMRC regularly.

Click here for more information on post graduate loan.

7) Company cars fuel rates

This is important for employers registered to use the pay-rolling service where car and car fuel benefits are made available to an employee.  The rates below apply from 1 March 2019.

Engine Size Petrol-amount per mile LPG-amount per mile
1400cc or less 11 pence 7 pence
1401cc to 20000cc 14 pence 8 pence
Over 2000cc 21 pence 13 pence
Engine Size Diesel-amount per mile
1600cc or less 10 pence
1601cc to 2000cc 11 pence
Over 2000cc 3 pence

Click here for more information.

8) National Minimum Wage Rates Changes

The national minimum wage rate from 1st April 2019 are shown in the below table.

Category of worker Hourly rate
Aged 25 and above (national living wage rate) £8.21
Aged 21 to 24 inclusive £7.70
Aged 18 to 20 inclusive £6.15
Aged under 18 (but above compulsory school leaving age) £4.35
Apprentices aged under 19 £3.90
Apprentices aged 19 and over, but in the first year of their apprenticeship £3.90

Click here for more information.

9) National Insurance Contribution

National Insurance Contributions (NIC) Rates for the tax year 2019-20 are shown in below tables.

Employee NI Rates expressed as decimal

National Insurance category letter Earnings at or above LEL up to and including ST Earnings above ST up to and including UEL/UST/AUST Balance of earning above UEL/UST/AUST
A 0 0.12 0.02
B 0 0.06 0.02
C NIL NIL NIL
H 0 0.12 0.02
J 0 0.12 0.02
M 0 0.12 0.02
Z 0 0.2 0.02

Employer NI Rates expressed as decimal

National Insurance category letter Earnings at or above LEL up to and including ST Earnings above ST up to and including UEL/UST/AUST Balance of earning above UEL/UST/AUST
A 0 0.1380 0.1380
B 0 0.1380 0.1380
C 0 0.1380 0.1380
H 0 0 0.1380
J 0 0.1380 0.1380
M 0 0 0.1380
Z 0 0 0.1380

10) Capital Gains Tax

Capital Gains Tax is a tax on the profit made when you sell (or ‘dispose of’) something (an ‘asset’) that’s increased in value. It’s the gain you make that’s taxed, not the amount of money you receive. The tax rate you use depends on the total amount of your taxable income. Read our blog “What is Capital Gains Tax” for more information.

There are complex rules around Capital Gains Tax so if you need more help please speak with an accountant.

22019/20
Annual exemption from capital gains £12,000
As a basic rate taxpayer:

Gains from other residential property
Gains from other chargeable assets


18%
10%
As a higher ratetaxpayer

Gains from other residential property
Gains from other chargeable assets


28%
20%
Entrepreneurs’ Relief (the lifetime limit on relief is £10 million)10%

11) Company tax rates

You can find out more about the taxes paid by companies in our “small business taxes” article.

Corporation Tax

The Corporation Tax rate remains at 19% for the 2019/20 tax year. The government plans to reduce the rate to 17% for the 2020/21 tax year.

2018/192019/20
Corporation Tax rate19%

VAT Registration

2018/192019/20
VAT Registration threshold – The level of revenue at which you must register for VAT£85,000

General VAT rates

2018/192019/20
Standard – The VAT rate applicable to most goods and services20%
Reduced rate – A lower rate applicable to certain goods and services5%
Zero rate – A rate applied to some goods and services (food, children’s clothes etc.).Note: this is not the same as items which are exempt from VAT0%

Flat Rate VAT scheme sector rates

If you decide to use the Flat Rate VAT scheme (available to those with revenue of £150,000 or less) you must choose a business sector and use the applicable rate for all transactions where VAT applies. If you are unsure which sector you fit into, speak to an accountant.

If turnover (inclusive of VAT) exceeds £230,000 per annum you can no longer use the Flat Rate scheme.

Remember if you’re a Limited Cost Trader you must use the 16.5% rate regardless of the business sector.

Mileage Allowances

HMRC’s approved mileage allowance payments (sometimes called AMAP) allow business mileage to be claimed as expenses at specific rates. The current rates are:

First 10,000 miles Over 10,000 miles
Car / van£0.45
£0.25
Motorcycle£0.24
£0.24
Bicycle£0.20
£0.20

Director Loan Rate

You can find out all about directors loan accounts in our handy Knowledge article.

2018/19 and 2019/20
If loaned amount exceeds £10,000 at any point during the year2.5% nominal interest on the whole amount plusClass 1A National Insurance contributions (13.8%), and may need to be reported on your P11D

Need accounting help?

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Disclaimer:
This guide was written specifically for Smart Accounting clients. Some of the information contained in this guide might not be applicable if you do not have a business managed by Smart Accounting. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.

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