Tax and allowance changes to look out for in 2019

Almost every year, personal income taxes change due to inflation and an increase in earnings. Going into 2019, this year is no different and the new tax rates will come into effect at the start of the new tax year for 2019/20 – 6th April 2019.

Personal Allowance

For 2018/19, the annual allowance on your salary was £11,850 and anything after that amount would be taxed. For 2019/20, this tax-free allowance has risen to £12,500, which is a change of £650. For example, if you earn £15,000 a year, only £2,500 of your salary would be taxed at the basic rate of 20%, as the first £12,500 would be exempt. This means you’ll pay £500 in tax. This personal allowance is also the same for those born before 6th April 1935 and between 1938 – 1948 because of a rule passed in 2016/17. This £12,500 personal allowance is looking to be maintained going into the tax year of 2020/21 also.

Tax Brackets

Due to the changes in the personal allowance, the tax brackets for annual income has also risen. In the 2018/19 tax year, the 20% bracket was from £11,850 to £34,500 and rates after were from £34,501 – £150,000 and above. These tax brackets will change in 2019/20:

  • Basic tax rate of 20% – any income between £12,500 and £37,500 which means this has widened by £3,000
  • Higher tax rate of 40% – any income from £37,501 and £150,000, which means this has been cut by £3,000
  • Additional tax rate of 45% – any income above 150,001, which means this hasn’t changed

Minimum Wage

With the personal allowance and tax brackets increasing, subsequently, the minimum wage will increase also:

  • Aged 25+ – hourly wages will go from £7.83 to £8.21
  • Aged 21-24 – wages will increase from £7.38 to £7.70
  • Aged 18-20 – hourly wage rates will increase from £5.90 to £6.15
  • Aged 16-17 – minimum wage will go up from £4.20 to £4.35


  • Rail travel has become more expensive and Britain’s rail fares have increased by 3.1%. However, a new railcard has been released for those aged 26-30 which costs £30 and cuts costs by a third.
  • Those who are auto-enrolled onto a pensions scheme may have to pay more from April 2019. The minimum contribution may increase from 5% to 8%, in which the employers will pay 3% of that amount. State pensions are also set to rise from £125.95 to £129.20 a week (£164.35 to £168.60 per week, if retired from April 2016 onwards).

At Barron & Co., we are experts in taxes, accounting and bookkeeping. Get in touch with our experienced and friendly accountants in Birmingham if you need advice regarding the new tax changes for 2019.