The new tax year is much like the Batman villain Two-Face: one side is a charming public servant helping the common folk (in this case with better wages and tax-free allowances), while the other side is a gnarled villain prone to causing suffering (though we’re talking about higher bills more than heists and hijinks).
As the old saying goes, you’ve got to take the good with the bad. So here’s what you should know about the changes that kicked in from 6th April 2019.
If you’re paid the National Minimum Wage or National Living Wage, expect to earn 20p–38p extra for each hour you work, depending on how old you are or whether you’re in your first year of an apprenticeship.
Under 18: £4.35
18 to 20: £6.15
21 to 24: £7.70
25 and over: £8.21
Personal allowance has risen from £11,850 to £12,500. This is the amount of money you can earn through work before you start paying income tax.
However, this amount shrinks if you earn more than £100,000. For every £2 you earn over £100,000, you lose £1 of personal allowance. So if you earn £125,000 or more, you have £0 of personal allowance.
If you’re married and one of you earns less than the personal allowance, while the other earns up to £50,000, the lower earner can transfer 10% of their personal allowance to the higher earner. This is called marriage allowance. Consider it an ongoing wedding gift from the Treasury.
How much income tax will you pay after your personal allowance?
If you earn up to £50,000 you pay 20% (basic rate)
If you earn between £50,001 and £150,000 you pay 40% (higher rate)
If you earn over £150,000 you pay 45% (additional rate)
If you live in Scotland these amounts are a little different.
If you earn up to £14,549 you pay 19% (starter rate)
If you earn between £14,550 and £24,944 you pay 20% (basic rate)
If you earn between £24,945 and £43,430 you pay 21% (intermediate rate)
If you earn between £43,431 and £150,000 you pay 41% (higher rate)
If you earn over £150,000 you pay 46% (top rate)
Capital gains allowance has risen from £11,700 to £12,000. This is the amount of profit you can earn from selling things before you have to pay tax. If you make a loss from selling something, you can add the amount to your allowance. So if you made £1,000 in profit from selling one asset, and lost £1,000 from selling another asset, you balance out.
How much tax will you pay after your capital gains allowance?
Basic-rate taxpayers (see income tax above) pay 10% on assets and 18% on property
Higher and additional-rate taxpayers pay 20% on assets and 28% on property
While an adult’s annual tax-free ISA allowance remains at £20,000, the amount for your kids’ savings has increased. You can now put £4,368 into a Junior ISA, instead of the previous £4,260.
The standard amount of allowance remains unchanged at £325,000. This is how much you can pass on to your beneficiaries before paying any tax. However, if a home is included in the inheritance you can add another £150,000 to the tax-free allowance, which is up from £125,000 last year. In total, then, you could pass on up to £475,000 tax-free.
Although you can still opt out of paying into a pension through work (you’ll be ‘auto-enrolled’ onto the service unless you say otherwise), the amounts you’re required to pay in have changed.
Employees now have to pay in 5% of their salary.
Employers now have to pay in an extra 3%. This is free money! Make the most of it.
The total amount of money you can keep in your pensions – whether workplace, private or a combination of the both – has raised from £1,030,000 to £1,055,000.
The weekly payment you get from the government once you’ve reached retirement age – the state pension – has increased.
The basic state pension has increased from £125.95 to £129.20.
The new state pension has increased from £164.35 to £168.60.
The additional state pension has increased from £172.28 to £176.41.
If you don’t know which one you’re entitled to, use this retirement income tool from Money Advice Service.
At what age do I qualify for the state pension?
Currently, both men and women have to be 65.
From 2020, you’ll have to be 66.
From 2026, you’ll have to be 67.
And it looks set to increase further as the years go on.
Almost every local council across the Isles is increasing the amount of council tax you have to pay them. Here’s a handy calculator from Which? that will figure out the new rate for your postcode.
The cost of your annual TV license has increased from £150.50 to £154.50. But if you’re over 75, you don’t have to pay a penny.
If you don’t need a TV license because you don’t use BBC services, but you keep getting their rude, threatening letters through the door (spoken from first-hand experience!), make sure you fill out a ‘No Licence Needed’ declaration. Details of how to do so are on the TV Licensing website.
All of the big six energy providers are increasing their prices in line with the energy regulator Ofgem’s new, higher price cap. The big six include British Gas, EDF, Eon, Npower, Scottish Power and SSE, but even if you’re with someone else you may still have to pay more.
On average, this price rise is expected to cost UK households an extra £117 a year. Fantastic…
We recommend you use a price comparison website to see if you can find a better deal by switching provider. Here are our step-by-step instructions for getting a better deal.
Really, we’ve only scratched the surface of all the changes that have snuck in this tax year. But these are the ones that affect the most people.
If you have a company car, or you buy to let, or you actually pay attention to your student loan balance, there are a few more changes that will have some impact. But most of them get complicated and deserve an article of their own. So remember, Google is your friend.
Happy tax planning!
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