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Durham University

Finance Department

Changes to the Income Tax and National Insurance Contribution Rates

You may already be aware of the following changes to the Income Tax and National Insurance contribution rates which came into effect on 6 April 2019. How these changes will impact on your net pay will vary depending on your personal allowances and pension scheme membership. This information allows you to consider the changes being implemented in your April pay.

Income Tax

  • The personal allowance (i.e. earnings on which there is no Income Tax due is increasing from £11,850 to £12,500 per annum at April 2019.
  • The basic rate band (20%) is increasing for taxable income from £34,501 to £37,501 per annum, so overall the 40% rate will be charged on taxable income above £50,001 in 2019/20.

2018/2019

£

2019/2020

£

Tax free personal allowance

11,850

12,500

20% band

34,501

37,501

Threshold for 40%

46,351

50,001

  • The additional rate of tax (45%) applies to taxable earnings over £150,000.

So, from April 2019 if you live in England the first £12,500 of taxable income will be tax free; the next £37,501 will be taxed at 20% with any additional taxed at 40%, until the 45% bracket of £150,000 is reached.

The Scottish rates are different. From April 2019 if you live in Scotland the first £12,500 of income will be tax free; the next £2,049 will be taxed at 19%; the next £10,395 will be taxed at 20%; the next £18,485 will be taxed at 21% and earnings over £43,430 will be taxed at 41% until the 46% bracket of £150,000 is reached.

Please note that taxable income is your monthly pay less any amounts that are tax deductible e.g. pension contributions, additional voluntary contributions and charity deductions.

National Insurance (NI) in England and Scotland

  • From April 2019 the lower earnings limit where NI is not deductible increases to £719 per month (£8,268 pa.)
  • NI is then payable at 12%, up to the upper earnings limit of £4,167 per month (£50,004 p.a.).
  • NI is then payable on any further earnings at 2%.

So, when your taxable earnings go over £50,001 you will pay additional income tax at 40% rather than 20%; but will pay NI at 2% rather than 12% if you live in England.