The budget didn’t deliver any shocks, but it’s still worth reviewing your finances.
With Christmas rapidly approaching, the Chancellor’s budget announcements on Monday 29 October 2018 might feel like a long time ago. If you didn’t manage to catch the full budget analysis, check out our quick tips.
Unlike other budgets, this one didn’t spring any big surprises or changes. Some personal allowances went up, a few stayed the same, and duties for things such as cigarettes and alcohol were increased, as is often the case. All in all, it wasn’t a budget to send people reaching for their calculator, but there were some Christmas-stocking-sized treats. You might want to think about how they affect you, before your thoughts turn to the holiday season.
Key things to think about for the 2019/20 tax year
Everyone's personal income tax allowance is going up to £12,500, tax free. And the higher-rate tax threshold is rising to £50,000. Make sure you (and your partner, if you have one) use all of your allowances.
Next year the ISA limit stays the same. ISAs are a great way to hold your investments. While the tax rules are subject to change and your individual taxes will depend on your circumstances, ISAs, for now, allow you to shelter any future income and capital gains from tax.
The capital gains tax annual exemption is going up to £12,000, and the basic rate band is increasing to £37,500. Investment returns in the form of capital gains tax (CGT), rather than income, are often liable to less tax, with the basic rate being 10%. Managing your CGT allowance properly could make quite a difference to your tax bill over the long term.
The inheritance tax Residence Nil Rate Band will rise to £150,000. This is per person, and if one partner dies, the other keeps their allowance. This means that a couple will be able to pass on £300,000 of their main residence, tax free. The rules around inheritance tax can be complex, so it’s worth getting some help to see that as much as possible of your money goes where you’d like it to.
Pensions remain a tax-efficient way to save for retirement. There will be the promised inflation-linked increase to the lifetime allowance, taking it to £1.055 million. If you have a company pension, the upper earnings limit for salary sacrifice has increased from £46,350 to £50,000.
Whenever the tax regime is changed, it can be a good time to review your financial situation. If you'd like to speak with one of our advisers about what next year's tax changes might mean for you, fill in the form below or call us on 020 3823 8678.
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