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Personal - income tax thresholds to rise

Personal allowance

The personal allowance increases from £11,850 to £12,500 from 6 April 2019. The allowance will also remain at this level for the 2020/21 tax year.

Basic-rate band

The basic-rate limit increases from £34,500 to £37,500 from 6 April 2019.

Consequently, this will increase the higher-rate tax threshold from £46,350 to £50,000. This limit will remain in place for the 2020/21 tax year.

Starting-rate band

The starting rate band for savings will remain at £5,000 for the 2019/20 tax year.

Future increases to the personal allowance and basic-rate band

From 2021/22, the personal allowance and the basic-rate limit will be indexed with the Consumer Price Index (CPI).

Company car benefit

The car fuel benefit multiplier increases from £23,400 to £24,100 from 6 April 2019.

Van benefit

From 6 April 2019, the flat-rate van benefit charge increases from £3,350 to £3,430, and the flat-rate van fuel benefit increases from £633 to £655.

ISAs

The adult ISA annual subscription limit remains at £20,000 for 2019/20.

The junior ISA annual subscription limit and the child trust fund annual subscription limit both increase from £4,260 to £4,368 with effect from 6 April 2019.

Lifetime allowance for pensions

The lifetime allowance for pension savings increases for 2019/20 from £1.030 million to £1.055m.

Gift aid

The limit of individual donations made under the gift aid small donations scheme has increased from £20 to £30. Under this scheme, donations are made in cash or by contactless payment.

The measure takes effect from 6 April 2019.

National living wage

The national living wage increases 4.9% from £7.83 an hour to £8.21 an hour from 6 April 2019.

Voluntary tax returns

Due to recent legal challenges regarding the validity of voluntary tax returns, legislation is being introduced to ensure returns will be accepted as valid returns on a statutory basis.

Social security payments

The Government confirmed the tax-exempt treatment of four existing social security benefits:

  • discretionary support scheme
  • council tax reduction scheme
  • discretionary housing payments
  • flexible support fund.

The Scottish Government is introducing five social security payments. Four of these shall be legislated as tax-exempt:

  • young carer grant
  • best start grant
  • funeral expense assistance
  • discretionary housing payments.

A fifth, carer’s allowance supplement, shall be a taxable payment.

This measure takes effect on the date of Royal Assent of the Finance Bill 2018/19.

Capital gains tax

Capital gains tax annual allowance

The capital gains tax (CGT) annual exempt amount for individuals rises from £11,700 to £12,000 from 6 April 2019.

Entrepreneurs’ relief

The Government has increased the minimum period to which certain conditions must be met in order for entrepreneurs’ relief (ER) to be available from one year to two years. This measure will take effect for disposals made on or after 6 April 2019.

The one-year qualifying period will continue to apply for business disposals made on or after 6 April 2019, provided that trade had ceased before 29 October 2018.

The Government also announced two new tests to the definition of a ‘personal company’ in relation to the qualifying criteria for ER to be available.

For disposals on or after 29 October 2018, all claimants must possess a 5% interest in both the distributable profits and the net assets of the company in order to be eligible to claim.

These tests must be met for the specified period for relief to be obtainable.

Lettings relief

From April 2020, lettings relief will only be available in circumstances where the owner of the property is in shared occupancy with the tenant.

Private residence relief

The final period of exemption will be reduced from 18 months to nine months with effect from April 2020.

Capital gains tax for non-UK residents

From 6 April 2019, all non-UK resident persons disposing of UK immovable property will be liable to CGT on gains arising from interests in any type of UK land.

In addition, all non-UK resident persons disposing of shareholdings in an entity that derives 75% or more of its gross asset value from UK land shall be taxed on any gains arising.

Inheritance tax

Residence nil-rate band

The residence nil-rate band (RNRB) increases from £125,000 to £150,000 from 6 April 2019 and to £175,000 from 6 April 2020.

For estates with a net value of more than £2m, the withdrawal rate is tapered by £1 for every £2 over the £2m threshold.

Any unused RNRB can be transferred to a surviving spouse or civil partner.

Minor technical changes relating to the downsizing provisions and the definition of ‘inherited’ for RNRB purposes have also been made.