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 £150,0001 | 40% 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
| Date | Employer Minimum contribution | Employee Minimum contribution | Total 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.
| 2 | 2019/20 |
| 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.
| 2018/19 | 2019/20 |
| Corporation Tax rate | 19% |
VAT Registration
| 2018/19 | 2019/20 |
| VAT Registration threshold – The level of revenue at which you must register for VAT | £85,000 |
General VAT rates
| 2018/19 | 2019/20 |
| Standard – The VAT rate applicable to most goods and services | 20% |
| Reduced rate – A lower rate applicable to certain goods and services | 5% |
| 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 VAT | 0% |
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 year | 2.5% nominal interest on the whole amount plusClass 1A National Insurance contributions (13.8%), and may need to be reported on your P11D |
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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.