In the new tax year, 2019–20, you can earn £12,500 before income tax is due. That increase in the personal allowance to £12,500 (up from £11,850 in 2018–19) will mean you’ll pay £130 a year less in income tax – and nearly £140 in Scotland, where tax as structured differently, even though the personal allowance is the same.
Due to a change in the National Insurance threshold, people of under pension age who work and pay NI contributions will see another £25 off what they pay, leaving them £155 better off overall – or £165 in Scotland.
Higher-rate taxpayers do rather better. The threshold where the basic tax rate of 20% rises to the higher rate of 40% (everywhere but in Scotland) rises from £46,350 to £50,000, so people who currently pay higher-rate tax will pay up to £860 less tax in 2019–20.
In Scotland the higher-rate threshold will remain at £43,430 so people taxed at the higher rate there, 41%, will pay just £140 less income tax. But in both jurisdictions, higher rate taxpayers who pay NI contributions will see them go up by nearly £340 a year.
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Outside Scotland you’ll still be more than £520 better off – but nearly £200 worse off if you live in Scotland.
In Scotland, the tax changes favour people who are lower earners – if you earn up to £27,000 a year, you’ll pay less tax there than if you lived in the rest of
the UK. But above that income, you will pay more tax in Scotland. Tax allowances for savings and dividends will be unchanged.
If you’re married or a civil partner and one of you has an income below £12,500 while the other pays basic-rate tax, then be sure to claim the marriage allowance. It’s worth £250 off the tax paid by whoever is the basic-rate taxpayer. You can go back four years, so you could get a cheque for £900 if you fulfilled the conditions back to 2015–16. If either of you was born before 6 April 1935, claim the married couple’s allowance instead, which is worth up to £891.50 off one partner’s tax bill, and applies even if you both pay tax.