With various different tax rates and thresholds for income, and new rules and exceptions being created all the time, the tax system is undeniably complex.
That makes planning seem a difficult task, but it’s worth taking the time to make sure your tax arrangements are as efficient as they can be.
For an overview of tax planning for businesses in 2019/20, see our previous blog.
Income
After one of the headline announcements from Budget 2018, the personal allowance and higher-rate threshold are increasing to £12,500 and £50,000 respectively.
This means taxpayers in England, Wales and Northern Ireland may see a lower income tax bill in the 2019/20 tax year.
Pensions and savings
There are relatively few changes to tax on pensions planned for 2019/20, aside from the lifetime allowance rising from £1,03 million to £1,055m.
However, the changes to income tax thresholds could affect tax relief on pension savings, as those below the higher-rate threshold will only be able to claim 20% in relief, rather than 40%.
The ISA allowance will remain at £20,000, but the allowance for Junior ISAs will increase to £4,368.
Capital gains
If you sell an asset that’s increased in value, you may have to pay capital gains tax if your gain exceeds the annual threshold.
This allowance is rising from £11,700 to £12,000 for individuals, and from £5,850 to £6,000 for trusts.
Inheritance
The nil-rate band for inheritance tax is set to stay the same in 2019/20, at £325,000.
However, the residence nil-rate band – which works on top of the existing nil-rate band for people passing on family homes to direct descendants – will increase as planned, from £125,000 to £150,000.
This gives married couples and civil partners a combined allowance of £950,000.
Get in touch
These are just a few of the main areas to consider ahead of the next tax year, but they don’t cover every detail that might affect you.
We can discuss your tax and financial situation in detail, and help you plan efficiently for 2019/20.
Talk to tracya@knightandcompany.co.uk or call 01628 631 056 to find out more about our tax-planning service.