Financial year 2019/20: 7 changes you should know about

    I1319 Financial Changes 19-20 765x350

    With Brexit looming and uncertainty rife, we take a look at the changes we can be sure of this new financial year.

    1. State Pension increases
    Thanks to the Government’s ‘triple-lock’ guarantee, the State Pension has risen by 2.6% on 6 April 2019, to £168.60. That’s an increase of £4.25 a week or £221 a year.

    The ‘triple lock’ means the state pension will rise each year by whatever is highest from: 

    • annual CPI inflation (announced in September every year)
    • average earnings growth
    • or 2.5%.

    This year, the state pension has increased by average earnings growth, which came in highest at 2.6%.

    2. Your tax-free Personal Allowance increases
    This is the amount you can earn before paying income tax. It increased from £11,850 to £12,500 in April. The higher-rate tax band has also increased, from £46,350 to £50,000.

    However, if you earn more than £46,350 your National Insurance contributions will have risen to 12% on what you earn between £46,350 and £50,000. This negates most of what you may save from the Personal Allowance increase.

    3. Pension contributions rise
    If you’re currently auto-enrolled in a company pension scheme, you’ll see your paycheque decrease slightly, as monthly pension contributions rise from 3% to 5%.

    Plus, your employer must pay at least 3% into your pension pot too – taking your combined total to 8%. This would mean more money in your pension pot in the long run, but in the short term will mean your take-home pay is slightly less.

    4. Buy to Let (BtL) tax relief reduced
    Landlords continue to feel the crackdown on their mortgage-interest tax relief, which is being gradually phased out.

    The 2019/20 tax year sees landlords only able to claim 25% of mortgage tax relief when filing their taxes – down from 50% in 2018/19.

    From April 2020, landlords will no longer be able to deduct mortgage costs from their rental income at all.

    All rental income earned will be taxable, and you’ll instead receive a 20% tax credit, which will can be applied to 75% of your mortgage interest.

    Read more about the BtL market tax changes.

    5. Pension Lifetime Allowance increases
    From April 2019, the pensions lifetime allowance increases from £1,030,000 to £1,055,000. This is the maximum amount that you can put into your retirement savings tax-free.

    Your lifetime allowance increases by the rate of Consumer Price Index (CPI) inflation which is currently 2.4%.

    6. NS&I interest rate to fall
    If you hold a National Savings and Investments (NS&I) Index-linked Savings Certificate, the interest rate will drop by about 1% next year.

    This is because the Government is changing the index NS&I uses from Retail Price Index (RPI) to CPI.

    Because of this change, you have the right to cancel your investment. So if your Certificate automatically renews, you’ll be able to cancel it within 30 days. NS&I will then refund the full value of your new Certificate with any interest due.

    However, if you choose to renew your Certificate for a different term, you won’t have the right to cancel. Instead, you can cash it in at any time, but the usual penalty will apply.

    Find out more about NS&I Index-linked Saving Certificates.

    7. Inheritance Tax (IHT) threshold rises
    From April 2019, the amount you and your spouse or civil partner can leave to your children and grandchildren without paying tax is rising to £950,000.

    As part of the threshold, the 'residence nil-rate band' – an extra allowance for those passing on their main homes to children or grandchildren after they die – is being raised from £125,000 to £150,000 for the new tax year, 2019/20.

    This brings the total amount that an individual can leave tax-free to £475,000, or £950,000 for married couples and civil partners.

    By 2020, the total tax-free allowance for those leaving their main residence to a child or grandchild is expected to rise to £500,000 for an individual, or £1 million for a couple.

    Your home may be repossessed if you do not keep up repayments on your mortgage. Loans are subject to status, terms and conditions. This website is for information purposes only. If you are in any doubt regarding suitability of our products please seek advice from an accredited independent mortgage adviser.

    Your eligible deposits with Castle Trust Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. For further information about the compensation provided by the FSCS, refer to the FSCS website at

    Castle Trust Bank means Castle Trust Capital plc, a company incorporated in England and Wales with company number 07454474 and registered office at 10 Norwich Street, London, EC4A 1BD. Castle Trust Capital plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, under reference number 541910.

    © 2021 Castle Trust Bank. All rights reserved.