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Happy? New Tax Year

6 April was the start of the new tax year, which sees the introduction of new tax measures and the withdrawal of some reliefs, which we have summarised below, find out what it could mean for you in 2020.

  • Personal allowance remains at £12,500;
  • The NICs threshold is now £9,500, up from £8,632. As a result, the average full-time worker will see their tax bill cut by £104 a year, and the typical self-employed worker by £78;
  • The national living wage (NLW) for workers aged 25 and over increased by 6.2% to £8.72 an hour from 1 April. Workers aged 21 to 24 saw their hourly rate increase from £7.70 to £8.20, while those aged 18 to 20 saw a rise of 30p to £6.45 an hour;
  • The pensions lifetime allowance will rise, up from £1,055,000 to £1,073,100;
  • The threshold at which the tapered annual allowance kicks in rises by £90,000 from £150,000 to £240,000;.
  • The state pension will go up by 3.9% in April, the biggest rise since 2012;
  • The amount that graduates can earn before starting to repay their student loan will increase from £25,725 to £26,575;
  • Landlords can no longer deduct any part of their mortgage expenses from their rental income to reduce the tax they pay. Instead, they will receive a tax-credit, based on 20% of their mortgage interest payments (this represents the last part of the phased in introduction);
  • Letting relief (a tax relief to mitigate the tax on the sale of a property that was the individual’s main home at some stage but has also been rented out), has been abolished. The period a property can be treated as lived in for principal private residence relief, after moving out is reduced from 18 months to 9 months;
  • Capital gains tax on the sale of the residential property, has to be reported and paid within 30 days of completion;
  • The significant changes regarding contractors and IR35 have been delayed until April 2021.

Remember, as with all tax matters, your individual allowances will depend on your personal circumstances. And, as this article goes to show, tax rules can change regularly!

But it doesn’t have to be a headache.

If you’re unsure how any of the recent legislation changes could affect you contact us