Personal tax allowance and thresholds: Rather than freezing the personal allowance, the Chancellor brought forward the increase to £12,500 to April 2019. The personal allowance will still be chipped away for those with a total income of £100,000 or more and the 40% threshold will now move to £50,000, but not across the whole of the UK. Whilst the personal allowance is set for all four countries by Westminster, we’ll have to wait for the Scottish budget in December for confirmation of the rates and bands that affect Scottish taxpayers. It seems almost certain that the introduction of Welsh income tax from April 2019 will see the status quo retained with the Welsh Assembly setting a 10% rate for all three bands, which will replace the 10% that will be deducted by Westminster.
National Insurance: There are no changes to NI percentages for 2019/20. The lower earnings limit will be £118 p.w., the threshold where NI begins to be paid will be £166 p.w. and the upper earnings limit, which is aligned to the 40% tax threshold, will be £962 p.w. The £3,000 employment allowance (EA) will be restricted from April 2019 to employers whose NI bill was £100,000 or less in the previous tax year.
Pro advice 1: Where a group of PAYE schemes are connected for the purposes of the EA, their total employers’ NI bill must be aggregated to calculate the £100,000 limit.
Pro advice 2: Where a PAYE scheme can no longer claim the EA, the marker must be set to “N” on the April 2019 EPS.
Termination payments: The Chancellor has delayed the introduction of Class 1A NI on termination payments over £30,000 to April 2020.
Car and van fuel benefit: The company car fuel benefit multiplier will go up to £24,100, meaning that employees will pay tax of between £3,856 and £8,917 depending on the C02 emissions of their car.
Status: The rollout of the IR35 off-payroll rules to the private sector will take effect in April 2020, but only for businesses with 50 or more employees. Small businesses using limited company contractors can still rely on them assessing whether the IR35 rules apply.
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