Most people turning on the news these days do so with more trepidation than anticipation… It feels as though we have been in a downward spiral of confusion and despair for longer than we care to remember. But for individuals and businesses alike, there are some positives to look forward to. Despite (or maybe because of) the uncertainties in our world at the moment, HMRC has offered some comfort in terms of extra allowances or rebates, and they are not far away. Here are three measures effective from April 2019 to brighten your financial day, or in the words of the late, great Ian Dury: ‘Reasons to be cheerful: one, two, three…’
PART 1: PERSONAL ALLOWANCES AND BASIC RATE TAX BAND INCREASE
Last year’s budget may seem a long time ago, but measures announced back in October included a rise in personal allowances – and a rise in the threshold for the basic rate tax band, meaning we get to keep more of our hard-earned cash.
The details are: Standard Personal Allowances go up to £12,500 (that’s the amount you can earn before you start paying any tax at all) and the earnings ceiling for the 20% tax band goes up to £50,000 – an increase of almost £4K.
PART 2: CAPITAL ALLOWANCES – THE MILLION DOLLAR (OR £1M) QUESTION
One of the Chancellor’s moves to boost the economy was to encourage businesses to invest by increasing allowances on equipment. Tax relief on new plant and machinery jumped from £200,000 to £1M – and there’s also ‘jam tomorrow’ as it’s already been announced that Corporation Tax will reduce to 18% next year.
PART 3: INHERITANCE TAX – INCREASE IN ALLOWANCE
Thinking about inheritance tax may not seem like an obvious topic for cheerfulness, but many people like to know that their loved ones will benefit as much as possible from what they leave behind.
When you die, the government assesses how much your estate is worth including your savings, investments, property, cars, and even any pay-outs from life insurance policies. If the total sum of these things comes to over £325,000 (the current Nil Rate Band for Inheritance Tax) your estate may be liable for tax at a whopping 40%. However, if your estate includes your home, you can potentially benefit from an additional allowance of £125,000 which is rising to £150,000 in April 2019 (and by a further £25,000, to £175,000 in April 2020).
This additional allowance is available, in full, to estates with a total value not exceeding £2M. Also, it is now possible to transfer any unused percentage of this allowance from the person who has died to their surviving spouse or civil partner.
So, while we’re the first to acknowledge that times are tough at the moment, when it comes to your finances, there are ways to ensure that you’re making the most of any silver linings available next time the sun comes out.
Let Cheshire accountants Afford Bond be your guide – for a no obligation chat, get in touch with our ever-cheerful taxation experts Paul Edwards at Paul.Edwards@affordbond.com or Chris Regnauld at Chris.Regnauld@affordbond.com