29 October 2018
Patricia Mock, Tax Director, comments on the Personal Allowance changes:
“In a welcome boost to taxpayers and perhaps a surprising move, the Chancellor announced that the personal allowance and higher rate threshold will rise to £12,500 and £50,000 in 2019/20 (£11,850 and £46,350 in 2018/19), meeting the Manifesto commitment a year early.
“This will mean an annual tax saving of £130 for basic rate taxpayers, up to £860 for higher rate taxpayers and £600 for those with income of more than £125,000 in England and Wales. The Scottish rates which will apply to earnings and pension of taxpayers resident in Scotland will not be announced until the Scottish draft Budget on 12 December.
“This is a costly move for the Chancellor; estimated to cost £2.79bn in 2019/20.
“The rates and thresholds for national insurance will affect these giveaways for those earning, as the lower earnings threshold is lower than the personal allowance. This has been increased from £8,424 to £8,632 with the upper earnings threshold being increased to match the higher rate income tax threshold of £50,000. This means a Class 1 National Insurance saving for basic rate taxpayers of £25, and an increase for higher rate and additional rate earners of £340, giving an overall tax and NIC decrease for basic rate employees of £155, higher rate employees of up to £520 and those earning more than £125,000 of £260.”
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