2019 tax changes you may not have heard about

By: Mike Parkes

Date: 10 June 2019

A business accountant works out her client's tax liabilities in 2019.

Following the start of a new tax year, it's always useful to stay abreast of changes to your responsibility. Many legislative updates in 2019 have been overshadowed by Making Tax Digital for VAT, causing smaller (but significant) changes to be overlooked.

While these developments may not have as drastic an effect on your accounting process, they could impact your earnings or operation.

Whether you need to preserve your personal finances or gain a better understanding of your business liabilities, Mike Parkes from GoSimpleTax has provided a guide on the lesser-known tax changes this year.

Personal Allowance has increased to £12,500

More than 30 million people are set to benefit from the increase in Personal Allowance. The tax-free sum has risen from £11,850 to £12,500 - netting the typical basic-rate taxpayer an additional £130 more.

According to Chancellor Philip Hammond, this move is in line with the rise in consumer price inflation and will particularly reward the self-employed.

The basic rate tax band has also changed - to £12,501-£50,000 in taxable income. This means that you will need to earn more than £50,000 (up to £37,500 after allowances have been deducted) before you start paying tax at the higher rate of 40%.

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The National Living Wage has increased to £8.21

The National Living Wage came into effect on April 1 2016. It was created to meet the needs of citizens aged 25 and above, by paying them an increased wage above the National Minimum Wage.

Provided you aren't in your first year of an apprenticeship, you will see your wage increase to £8.21 an hour. While 2.4 million people are set to benefit, there has been a cooler reception from SMEs, especially those whose business relies on a minimum wage workforce.

There are fears that such increases are putting pressure on employers. In 2016, the British Retail Consortium lobby predicted that UK retailers will have to find £3 billion a year by 2020 to handle increases to the National Living Wage. If you employ staff, ensure that you can afford the rise in pay.

Business rates relief to cut bills by a third

However, it's not all bad for small businesses. As part of a £13 billion rates relief scheme from 2016, those who qualify as a 'small retailer' will get a third off their business rates bills.

Specifically, your business will only qualify for small business rate relief if your property's rateable value is less than £15,000, or if your organisation only uses one property. When you get a second property, you'll keep receiving existing relief on your main property for 12 months.

Provided you meet the criteria, you won't pay business rates on a property with a rateable value of £12,000 or less. If your rateable value is between £12,001 and £15,000, the rate of relief will go down gradually from 100% to 0%.

The New Enterprise Allowance has been extended

The New Enterprise Allowance (NEA) is a government scheme that provides growth advice and funding for benefits claimants. The initiative is designed to help fledgling entrepreneurs and freelancers get their ideas up and running.

Since 2011, the scheme has been credited with supporting 120,000 businesses. The government has recognised the project's success and confirmed it will be continuing for another two years from April 2019 - with 30,000 spaces available.

If you're 18 and have a feasible business plan, you could be entitled to a weekly allowance worth up to £1,274 over 26 weeks. However, this has aroused the ire of some individuals, who highlight the fact that the NEA payment is significantly lower than Jobseeker's Allowance.

Copyright © 2019, Mike Parkes. Go SimpleTax offers HMRC-approved MTD-compatible software and a specialised bridging software product that can help you comply with MTD.

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