The Budget 2019
Philip Hammond’s Spring Statement comes at a critical time in a series of Brexit Votes. No major surprises here once again but most notably, Making Tax Digital will not be extended to any additional taxes until 2021, when the system has shown to work well.
Making Tax Digital (MTD)
The government confirmed a light touch approach to penalties in the first year of MTD’s implementation. MTD will not be extended to any new taxes or businesses in 2020.
The Chancellor’s statement confirmed a light touch (soft-landing) approach to penalties in the first year of implementation. “Where businesses are doing their best to comply, no filing or record keeping penalties will be issued “.
The personal allowance for 2019-2020 will rise to £12,500 and the basic rate band will increase to £37,500 (outside Scotland), making the higher rate threshold (the sum of both) £50,000. These increases are significantly higher than current inflation levels.
National Insurance Contributions and Thresholds
The national insurance contribution (NIC) thresholds will be increased by 7.9% with primary threshold at £8,632. The upper earnings limit (for employees) and upper profits limit (for the self-employed) will rise to £50,000, matching the UK higher rate income tax threshold outside Scotland
Class 2 NICs, which were due to cease in April, will survive until at least the end of the current parliament. The Class 2 rate for 2019/20 will be £3.00 a week.
Class 4 national insurance remains at 9% on earnings over £8,632.
Company car tax will rise for all but the highest emission vehicles from 6 April 2019. The taxable cash equivalent percentages will all increase by three percentage points, subject to the current ceiling of 37% of list price
Inheritance Tax (IHT)
The residence nil rate band, which was introduced in 2017/18, will rise by £25,000 to £150,000 in 2019/20. The main nil rate band will remain at £325,000 – the level set in 2009.
Automatic Pension Enrolment
The minimum contribution levels for workplace pensions operating under the automatic enrolment provisions will rise from 6 April 2019. The earnings trigger for automatic enrolment will be £10,000, with employer contribution of 3% in the £6,136-£50,000 band of earnings and employee contributions 5% in the £6,136-£50,000 band of earnings.
The Rent a Room allowance is now £7,500.