The new tax year began on 6th April and presents a great opportunity to reassess your finances and personal financial planning goals.  Setting goals means making an informed decision on what has changed and what it could mean for you.


Here are some of the biggest changes that could affect your personal financial planning for 2019.


The Auto-Enrolment Minimum Contributions Have Risen

More than 10 million people have been automatically enrolled in a Workplace Pension since 2012 and until 2018 the minimum contribution had remained at 2{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89}. In 2018 it increased to 5{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89} and now it has increased again.


As of 6thApril 2019 the new minimum is 8{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89}. This figure will specifically affect those earning between £6,136 and £50,000, with a 4{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89} employee contribution, 3{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89} employer contribution and 1{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89} tax relief from the government.


This is fantastic news for saving in the long-term but doesn’t mean you shouldn’t be making higher contributions. 8{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89} will now be the absolute minimum – but to really ensure you will be in a sturdy financial position when retirement finally does become a prospect, you should consider contributing more.


The Pensions Lifetime Allowance is also rising

The Lifetime Allowance (LTA) is the limit on the amount of pension benefit that can be built up within a pension without triggering an extra tax charge. Until the 6ththe LTA was £1,030,000 but it has now changed to £1,055,000. What does this mean for you? Frankly, not a great deal in terms of change because the change only reflects the rising Consumer Prices Index – but as a saver it means you could trigger extra tax by saving more than this amount.


Don’t let the LTA put you off making the best savings you can – instead, speak to your financial adviser about the options available to you.


The State Pension Has Increased 

The state pension is protected by ‘Triple Lock’, which means it will either increase by the highest of 2.5{667290b260ff28168e623797c2c2c0d16bc37bf47122766d0a4dd91733155e89}, price inflation, or average earnings growth. Anyone receiving the full-rate new state pension will see a £4.25 increase per week – which is an extra £221 per year.


Although this could be a welcome boost for pensioners (as it’s currently above inflation), just like all financial changes, there will be trade-offs. The particular trade-off for this increase lies in the age you’ll qualify for the pension. In October 2020, pension age will rise to 66 and could rise to 67 between 2026 and 2028.


Personal Allowance and Income Tax Rate Bands Have Changed 

Personal allowance is the amount of money you can earn before paying anyincome tax. As of 6thApril it increased from £11,850 to £12,500 – that is an extra £650 of tax-free earnings.


To really get into the details and see how you could make smarter financial plans for the next 12 months, speak to a team member at IBC.

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