Personal tax planning for 2019/20
With the Brexit process rumbling on and Making Tax Digital finally coming into force, now is the time to put your financial plans in place for 2019/20.
The way you receive an income, and the tax rates and allowances that apply, should be at the front of your mind.
The annual dividend allowance remains at £2,000 for 2019/20 after reducing from £5,000 this time last year.
With the new personal allowance of £12,500 added to the frozen dividend allowance, the maximum tax-free income you can receive through dividends is £14,500 in 2019/20.
Capital Gains Tax
If you own any chargeable assets that have increased in value, your profit may be liable to capital gains tax (CGT). The tax-free allowance for these gains in 2019/20 is £12,000, or £6,000 for assets held in trust.
If any gain over and above the tax-free allowance when added to your income is within your basic-rate band, CGT will be paid at the rate of 10%. Once the gain takes you into the higher-rate band, CGT is payable at 20%.
How many days you spend in the UK determines your residential status for UK tax purposes, although the rules are very complex. If you are a UK resident but not domiciled here, you may need to pay UK tax on your foreign income.
Pension tax planning
The annual pensions allowance enables you to contribute up to £40,000 in 2019/20, while you can also utilise any unused allowance from the last three years of an existing scheme.
If your adjusted income exceeds £150,000 in 2019/20, your annual allowance will be reduced by £1 for every £2 that exceeds this threshold down to a limit of £10,000. You will retain your entire allowance if your threshold income is lower than £110,000 in 2019/20.
However complicated your situation, we can advise you on the most effective tax planning measures for your personal or business affairs. Contact our Personal Tax Planning Team on 01223 810 100 for advice.