UK Tax Changes Coming April 2019

March 11, 2019 4:27 pm Published by

UK Tax Changes Coming To Payroll Blog - First CallFollowing the October 2018 budget, we summarised the key changes impacting businesses and individuals for the upcoming tax year. You can read our summary here.

Now the new tax year looms, employers must ensure they are prepared for the upcoming changes to prevent non-compliance; the changes impact many areas of tax in the UK including payslips, income tax and VAT.

Find out more about the upcoming changes, what they mean for employees, the self-employed and employers, and how you can ensure you are prepared.

Income Tax Changes – Personal Allowance Increases

From 6th April 2019, the amount a person can earn before paying tax will increase, this is known as a ‘Personal Allowance’ and will rise from £11,850 to £12,500. In addition to a tax saving for workers in England and Wales, these changes also mean that some lower earning individuals will not have to pay any Income Tax at all.

Additionally, the thresholds for basic and higher rate tax are increasing, meaning that taxpayers can earn more before having to pay a higher rate of tax, this will also result in some taxpayers who are just over the current higher tax threshold paying less in tax as they fall back into the Basic Rate band.

Tax Rate  2018 / 2019 Threshold2019 / 2020 Threshold
Personal Allowance £11,850£12,500
Basic Rate (20%)£11,851 – £46,350£12,501 – £50,000
Higher Rate (40%)£46,351 – £150,000£50,001 – £150,000
Additional Rate (45%)£150,000 +£150,000 +

How Will This Impact Me?

If you’re a taxpayer in England or Wales, the likelihood is that you will pay less tax in the coming tax year than in years previous, provided that your earnings haven’t changed.

If you are an employer, the impacts of these changes should be negligible as an employee’s individual allowance is reflected in their PAYE tax code, meaning that you will just need to update their payroll record with their new tax code once notified by HMRC.

National Minimum Wage and National Living Wage Increases

From April 2019, the National Minimum wage (NMW) and National Living Wage (NLW) will increase, there is also a 5.4% increase for apprenticeship wages:

Current RateNew Rate
NLW£7.83£8.21
NMW – 21 – 24 £7.38£7.70
NMW 18 – 20£5.90£6.15
NMW 16 – 17£4.20£4.35
Apprenticeship Rate£3.70£3.90

How Will This Impact Me?

If you’re an employee receiving the NMW or NLW, the pay you receive will increase. If you find no change in your pay after 6th April, you should raise it with your employer immediately.

If you’re an employer, you must ensure your employee payroll records are updated to reflect this increase.

Making Tax Digital for VAT

The next big milestone for Making Tax Digital (MTD) comes in April 2019. From this date, all businesses with a taxable turnover of more than £85,000 will be required to keep VAT records digitally – submitting any returns through the MTD online platform using compliant software.

How Will This Impact Me?

If you’re a business with a taxable turnover of £85,000, you’ll be required to keep VAT records digitally from April 2019. Note that HMRC does not have its own software to fulfil this, so you will need to ensure that your external accountant or your in-house team uses HMRC approved software that is compatible with the new VAT for MTD system.

Read our blog to keep up with the latest updates on Making Tax Digital for VAT.

Updates to Payslips

Two significant changes are coming to the UK payslips in April 2019. From this date, not only will all employees need to be provided with a payslip (including those that are classed as workers), but these payslips will also need to provide more information about pay based on the number of hours worked throughout the period in question.

How Will This Impact Me?

If you’re an employee or worker that has not previously been given a payslip, you can expect to receive one from April 2019. As a minimum, this payslip will include your gross salary, net salary, any deductions and information about the number of paid hours worked if you are paid based on the number of hours you work.

If you’re an employer, you’ll need to ensure that your payroll software is compliant with the upcoming changes and can generate itemised payslips for every employee on your books. You may also need to revisit your GDPR process to address any complications that may arise.

For more information, read our blog on the April 2019 payslip changes.

Accountancy and Payroll Experts Bristol

At FCF, we help businesses get their payroll right. If you’re concerned about ensuring compliance with any of the changes mentioned in this post, we can help. Call one of our friendly team today on 0117 379 0810 to arrange a free no obligation consultation for your business.

Steph Roffey

Steph is a Chartered Accountant with many years’ experience working in audit compliance and general accountancy. She is a Fellow of the ICAEW and has extensive knowledge of accountancy and tax for the self employed.

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This post was written by Steph Roffey

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