As the 2019/20 tax year, covering the period 6 April 2019 to 5 April 2020, has begun there are a few changes which came into effect from a personal tax perspective.  Here we look at two of them - the marriage allowance and the personal allowance.

Marriage Allowance

It is possible for some couples, where one spouse or civil partner’s income is below the personal allowance, to transfer 10% of their personal allowance to their spouse or civil partner. This is only possible if the other spouse or civil partner’s income is taxed at the basic rate, so if you are a high earner, you cannot benefit from this allowance.

The Marriage Allowance can be claimed by contacting HMRC, or by making a claim on your self-assessment tax return.  If you have a spouse or civil partner who is earning less than £12,500 per year and have not claimed the marriage allowance before, please get in touch as we may be able to help you claim for the current year and previous years.  Getting you a nice tax rebate!

Personal Allowance

The personal allowance has increased with effect from 6th April 2019 to £12,500, an increase of £650 from the 2018/19 tax year (£11,850). This means that for most people living and working in the UK, the first £12,500 of income is tax free.  For most basic rate taxpayers this will mean that you are better off by £130 this year.

If you have “adjusted net income”, (a technical term and beyond the scope of this article to explore in detail) of more than £100,000, your tax-free personal allowance will be reduced by £1 in every £2.  There will be no entitlement to the personal allowance if your "adjusted net income" exceeds £125,000.  There are ways to deal with this reduction in the personal allowance for high earners and if you are affected, please get in touch to find out how we can help.