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The UK tax year runs form the 6th April to the 5th April the following year. Each year, the Chancellor of the Exchequer delivers a Budget Statement to the House of Commons, announcing the government's tax and spending plans for the year ahead and proposed changes to taxation. This article reflects on the key points of the 2019/20 tax year, and the Budget plans and dates for the upcoming 2020/21 tax year applicable to England.
The tax-free personal allowance is the amount of money which an individual can earn before paying tax. In 2019/20, the tax-free allowance increased to £12,500 and will remain the same throughout the 2020/21 tax year. However if income is above £100,000, £1 of personal allowance is lost for every £2 earned.
In the upcoming 2020/21 tax year, there are no planned changes to income tax thresholds, VAT or national insurance. During the 2019/20 and 2020/21 tax year, for England and Northern Ireland, the basic rate tax band will remain at 20% on taxable income up to £37,500. The threshold of the higher income tax rate also remains the same at 40% on annual earnings from £37,501 to £150,000. The additional tax rate is 45% on annual earnings over £150,000.
The Scottish Government has operated a different income tax regime compared to the rest of the UK since the 2018/19 tax year:
Personal savings allowance refers to the amount of income generated from savings each year. There are no planned changes to these amounts in the upcoming 2020/21 tax year:
The nil-rate band of £325,000 remained the same throughout the tax year or 2019/20 and there shall be no further changes to this amount in 2020/21. However, the additional residence nil rate band, when a residential property is passed on death to a direct-line descendant, saw increases in 2019/20 to £150,000, and this will rise again to £175,000 in April 2020, in line with the Consumer Prices Index.
The National Living Wage came into effect on 1st April 2016 is an obligatory minimum wage paid to workers in the UK aged 25 and above. As of April 2019, the National Living Wage rates are:
The rate is set to increase from 1 April 2020 to £8.72 for workers over 25, which is the most significant increase since it was introduced in April 2016.
The recent COVID-19 global health crisis has created a significant amount of uncertainty on the economic outlook. Within the 2020 Budget, the UK Government has announced various plans to support public services, individuals and business, with the public safety being the government’s top priority. Budget plans include:
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