As the beginning of the 2019/20 tax year approaches, a handful of significant changes to tax and business legislation are set to take effect.
Rising National Living Wage (NLW) and National Minimum Wage (NMW) rates
From 1 April 2019, the NLW for employees aged 25 and over will increase to £8.21 per hour. Meanwhile, the NMW will increase to £7.70 for workers aged 21-24, and to £6.15 for workers aged 18-20. For employees who are aged 16-17, the NMW will rise to £4.35 per hour, and for apprentices, the rate will rise to £3.90 an hour. An apprentice is an individual who is aged under 19, or 19 and over in the first year of their apprenticeship.
Changes to income tax
In 2019/20, the income tax basic rate band will rise to £37,500. The threshold at which the 40% band applies is £50,000 for taxpayers who are entitled to the full personal allowance (PA). Individuals pay tax at 45% on their income over £150,000. From April, the PA will rise from £11,850 to £12,500.
The tax on income for taxpayers resident in Scotland is different to income tax paid elsewhere in the UK. In 2019/20, there are five income tax rates, which range between 19% and 46%. The two higher rates are 41% and 46%, as opposed to the 40% and 45% rates that apply to such income for other UK residents. For 2019/20, the threshold at which the 41% band applies is £43,430 for those who are entitled to the full PA.
Meanwhile, from April 2019, the Welsh government has the power to vary the rates of income tax payable by Welsh taxpayers. The Welsh rate of income tax has been set at 10p by the Welsh government: this will be added to the reduced rates. As a result, the tax payable by Welsh taxpayers continues to be the same as that payable by English and Northern Irish taxpayers.
Alterations to employer-provided cars
Most cars are taxed by reference to bands of CO2 emissions, multiplied by the original list price of the vehicle. The maximum charge is capped at 37% of the list price of the car. For 2018/19 there was generally a 2% increase in the percentage applied by each band. For 2019/20 the rates will increase by a further 3%.
Increase in compulsory employer pension contributions
As part of the pensions auto-enrolment scheme, employers are currently required to contribute at least 2% on the qualifying pensionable earnings for eligible jobholders. From 6 April 2019, this figure will increase to 3%.