2020: New Year, New Rules
10th January 2020
2020 is finally here, and it’s time to ring the changes. The taxman’s year doesn’t officially tick over until the 6th of April, but we’re already eyeing some of the financial shifts 2020/21 will be bringing our way. Some of it’s good news, other bits are not-so-great, depending on your circumstances. Either way, here are a few new money rules and tweaks coming your way in the next tax year.
New rules for buy-to-let landlords
Even if it’s not their full-time job, a lot of people make a valuable second income from renting out property. When the new tax year kicks in on April the 6th, the slow-motion phase-out of mortgage interest tax relief will mean you’re only able to claim 20% of your mortgage expenses in your Self Assessment returns. This comes on top of the new rules stopping letting agents from charging fees to tenants and a cap on how high you can set the deposit ( 5-6 weeks’ worth of rent, depending on the amount of rent being charged). There are also new regulations on how much the Council Tax bill can be raised on empty properties – which is set to double from 50% to 100%.
If you are renting a property and you've not done your Self Assessment tax return for the 18/19 tax year, the deadline is the 31st of January. Give us a call right away if you need help. Read more about the rules for tax on income from renting rooms and properties.
It’s probably no big surprise that train fares are on the way up again. This year, they’re set to rise by around 2.7% on average. Commuters are pretty used to getting hit a little harder with their travel expenses each year, and honestly there’s not much they can do about it. If you’re travelling to temporary workplaces, though, the silver lining is that you can factor the increase into your tax rebate claims. Remember, public transport still counts for refunds, as long as you’re footing the bill yourself.
Check if you're due a tax refund now. You can claim for the last 4 tax years, so if you've not claimed for 15/16 by the 31st January do it now or you'll miss the chance to get that money back!
Universal Credit’s going up
It’s not the most popular system the government’s been ramming through in recent years, but Universal Credit is still a lifeline for many people and it’s looking like it’s here to stay. The rate for UC is set to increase by 1.7% in 2020/21, keeping pace with inflation. It doesn’t sound like a lot, but it’s certainly a little better than the caps and rate freezes people have been used to recently.
Inheritance Tax threshold changes
From April, we’ll all be able to die a little happier. Well, probably not – but from the start of the 2020/21 tax year, the threshold for Inheritance Tax will be going up to £1 million. Basically, if you get an inheritance below that amount, it’ll be tax-free. Obviously, there are wrinkles and exceptions to the system, depending on things like marital status and whether or not you own your own home – but still, it’s probably the closest thing you can get to good news involving a death in the family.
Stay healthy if you want your pension
We’re all going to have to live a little longer if we want to retire. Again, this is old news to most working-age people, having watched the State Pension age steadily creep up for years. As things stand right now, you’ll have to wait until you turn 66 to collect your pension (after October, that is). If you’re not retiring any time soon, though, it’s going to take even longer. Between 2026 and 2028, the current plans are to raise the retirement age to 67, and then again to 68 between 2037 and 2039 (which is a full 7 years earlier than when they’d originally planned to make that change). Things move fast in the State Pension game, though, so it’s anyone’s guess what the real numbers will be by the time it matters for people with decades still left on the clock.
Minimum prices for alcohol
Dry January looks like it might stretch out for a few extra months this year, with April bringing a new minimum price of 50p per unit of alcohol in your preferred beverage.
A lot can change in a year, and you’ve got to keep on the ball to make sure that new laws, rules and thresholds don’t trip you up. Always talk to RIFT for the most up-to-date information and explanations – and have a terrific 2020!
RIFT are the UK's leading tax rebate and tax return specialists. If you're interested to find out if you're due any tax back from HMRC then use our free tax rebate calculator to get an instant estimate of how much your refund could be.