It’s the most wonderful time of the year! Sort of. With self-assessment deadline a not-so-distant memory and the promise of summer on the horizon, it’s that time of year where everything changes just to keep us on our toes.
As we broke into a new tax year last week, what are the main changes that you should know about?
As always, the tax-free Personal Allowance on earnings has risen from £11,850 to £12,500, after which earners will be subject to 20% tax. The threshold for the higher rate tax of 40% has also risen, from £46,350 to £50,000.
Marriage Allowance (which we wrote a blog on here) has seen a small increase of £40 to £1,190 while the not-to-be-confused-with-Marriage-Allowance Married Couples Allowance (for couples where one partner was born before 6th April 1935) has gone up by £250, to £8,695.
If you have employees, minimum wage and the National Living Wage has seen a hike of 4.9%, which will affect thousands of businesses across the UK. The National Living Wage (payable to those over 25) sees an increase of 38p per hour to £8.21. The amounts and increases differ according to the age and status of a worker – full details can be found on the government website.
In the wake of the recent spotlight on the demise of our high streets, Hammond promised Business Rates Relief, which comes into play this tax year. It means those businesses in properties with a rateable value of £51,000 or less will get a third off their usual business rates for the next two years. Bonus!
The other bits
A rise in the Capital Gains exempt amount was seen, rising from £11,700 to £12,000.
National Insurance contributions remain largely the same, though a grumble at the back can be heard from those self-employed who are liable to pay Class 2 contributions, as these are also subject to a small rise to of 5p per week.
Benefit in Kind tax rates have risen for company cars. The percentage that applies to any particular car also increases according to its CO2 emissions. The amount you’ll pay depends on any number of variables, but thankfully HMRC has produced a handy calculator here so you can get your head around it.
Making Tax Digital for VAT
We’re cheating a bit here as this isn’t technically part of the tax year change, but it’s an important one regardless. From 1st April, Making Tax Digital (MTD) for VAT went live, meaning most VAT-registered businesses with a turnover of over £85,000 will need to keep digital records and submit VAT returns online. We’ve covered it in detail here on the blog.
We are ready for Making Tax Digital even if you’re not. Get in touch today to find out how we can help.