The value of investments and any income from them can fall and you may get back less than you invested.

Spring Statement 2019


In normal times, Philip Hammond’s Spring Statement would be top of the news agenda. However, the chancellor’s update on the nation’s financial health was this year eclipsed by the ongoing political turmoil over Brexit.

With attention focused on the no-deal vote to come later in the day, Mr Hammond kept things as short and sweet as he could. There were reassuring statements about the robustness of the economy and the longer-term outlook, tempered with warnings of the disruption that would follow if a Brexit deal isn’t agreed.

As expected, the chancellor didn’t make any tax changes, as the main budget is now held in the autumn rather than the spring. Instead he stuck to delivering the latest growth forecasts as well as setting out plans for consultations and further investments in infrastructure, technology, skills and housing.

There was also some welcome news for business owners grappling with the introduction of Making Tax Digital. From 1 April, businesses with turnover over £85,000 will be required to keep VAT records digitally and use software to submit their VAT returns. Responding to criticism that businesses haven’t been given enough time to prepare, the chancellor announced a “light touch approach to penalties in the first year of implementation”[1].

In the absence of any other major tax announcements, we think this is an opportune time to remind you to make the most of the tax allowances that already exist. We detail the key allowances below.

Before that, here is a rundown of the key points in the Spring Statement. But remember, these are all predicated on a smooth and orderly exit from the EU.

The economy

Mr Hammond’s speech was a mix of positive news, caution on the outlook and a warning to MPs about the risks of a no-deal Brexit.

The Office for Budget Responsibility (OBR) cut its growth forecast for 2019 from its previous prediction of 1.6% to 1.2%, the weakest growth rate since 2009. But after that growth is expected to rebound, to 1.4% in 2020 and 1.6% in 2021, 2022 and 2023[2].

The chancellor took the opportunity to trumpet record levels of employment and wages rising at the fastest pace in a decade. He also highlighted stronger performance in the public finances over recent months. A stronger than expected rise in self-assessed income tax receipts in January, driven by a surge in pay for Britain’s highest earners, helped to bring down government borrowing to £22.8bn in the financial year to date (1.1% of GDP).  This is almost £3bn lower than the £25.5bn predicted by the OBR in the October Budget[3].

The OBR expects the improvement in the public finances to continue. While borrowing is expected to rise to £29.3bn next year, it is then predicted to fall over the next four years[4].

Prepare for the new tax year

Given the lack of new tax announcements in the Spring Statement it is worth having another check that you are making the most of tax allowances and reliefs that already exist. With just three weeks left until the end of the 2018/19 tax year, time is running out to use what, in some cases, are very generous allowances.

Below we explain what action you might want to take, if you haven’t already done so.


If you don’t use your 2018/19 Individual Savings Account (ISA) allowance before the end of the tax year you’ll lose it forever. You have until 5 April to use this year’s allowance of £20,000 (£40,000 for a couple). Though to ensure you don’t lose out, we suggest you act sooner rather than later.

If you have a ‘flexible’ ISA and have made a withdrawal in the current tax year, you may be able to replace the money taken out without it counting towards your 2018/19 ISA allowance, provided this is completed by 5 April. Check with your ISA provider to see whether you are eligible.   

If you have children, the adult ISA allowance shouldn’t be the only allowance on your radar. A separate allowance means you can also put up to £4,260 a year into a Junior ISA account on behalf of a child.

Junior ISAs (JISAs) are open to all under-18s who are resident in the UK. Only parents or guardians with parental responsibility can open JISAs on behalf of a child, but anyone can contribute, be they grandparents, godparents or friends.

JISAs have the same tax benefits as adult ISAs, though with a JISA, the money is locked away until the child’s 18th birthday. At that point it converts to an adult ISA and they can access the funds.

There may be a worry that once the youngster has access to the money they will spend it irresponsibly. That said, if you involve the child at an earlier stage in monitoring their JISA's performance, it can be a great way to help financially educate them. Setting expectations for the money can also be a good way of influencing how it is spent, for example earmarking the JISA funds for university fees, a first car or even a deposit for a first home.


Pensions also have an annual allowance. Currently, contributions to pension schemes can be made up to a gross annual limit of £40,000*. However, it is important to bear in mind that the £40,000 annual allowance is tapered for those with adjusted income of over £150,000. The £40,000 allowance goes down by £1 for every £2 of income above £150,000 until it reaches a lower limit of £10,000. Any investment income or growth achieved whilst invested over subsequent years will be free of both income tax and capital gains tax.

The annual allowance isn’t necessarily lost at the end of the tax year, as you may be able to ‘carry forward’ any unused allowance from the previous three years. However, as you can’t get tax relief on more than you earn in any given year, for most people, contributing to a pension on a regular basis is likely to be the best way to benefit from the available tax breaks.

It is worth remembering that people aged under 75 with no earnings are also eligible for basic rate tax relief of 20% on pension contributions up to £2,880 per year (which boosts the value to £3,600). This includes children. Money in children’s pensions can’t be accessed until age 55 (increasing to 57 in 2028) but can give a huge boost to their retirement savings.

*The annual pension allowance is dependent upon several factors and the £40,000 limit may not apply, depending on individual circumstances.


In the current tax year, the first £2,000 of dividend income you receive a year is tax free. This is on top of the existing personal allowance for income (£11,850 in 2018/19). Dividends over £2,000 are taxed at 7.5% (for basic-rate taxpayers), 32.5% (higher-rate taxpayers), or 38.1% (additional-rate taxpayers).


The personal savings allowance means that basic-rate taxpayers can earn up to £1,000 of interest on savings without having to pay any income tax. Higher-rate taxpayers can earn up to £500 interest tax-free.

Marriage allowance

Where an individual has income below the personal allowance limit of £11,850 and their spouse or civil partner does not pay higher or additional rate income tax, they may be able to transfer up to £1,190 of their unused personal allowance to their spouse or civil partner. This allowance can result in a tax saving of up to £238 this tax year and can be backdated to the 2015/16 tax year.

Capital gains tax

One allowance that many investors forget is their ‘annual exempt amount’ for capital gains tax (£11,700 in 2018/19). You don’t pay tax on gains arising from the sale of eligible assets (such as shares you hold directly) until you’ve gone over this level.

If you have a large portfolio of shares outside an ISA, it may be worth using as much of this allowance as possible each year – by selling assets that have risen in value – or you could be storing up a large exposure to capital gains tax for the future.

Sharing the ownership of assets with a spouse or civil partner can also enable couples to make significant capital gains tax (and income tax) savings as both partners can utilise their allowances and exemptions.

Your Brewin Dolphin financial planner or investment manager can help you decide whether it is time to take action. Contacting them now will mean there is enough time to make the necessary decisions.

Inheritance tax

Most people wait until death before passing on their wealth through their wills. But, transferring wealth while you are alive can have a transformative effect on your family’s life and reduce an inheritance tax (IHT) liability.

There are a number of annual gift allowances, which may be lost if you don’t make use of them before the tax year end.

• You can give away £3,000 each year and this will not be subject to IHT.

• You can give as many gifts of up to £250 per person as you want during a tax year, as long as you haven’t used another exemption on the same person.

• Surplus income can also be gifted provided you can maintain your standard of living after making the gift.

2019/20 tax year changes

There were no tax changes in the Spring Statement. However, some significant tax changes announced in previous Budgets could affect you when the new 2019/20 tax year begins on 6 April.

Income tax

The personal allowance – the amount you can earn before paying income tax – will rise to £12,500 on 6 April 2019. The threshold for the start of the higher-rate 40% tax band will rise from £46,350 currently, up to £50,000 in 2019/20[5].

While this will be welcome for many taxpayers, it will provide little benefit to higher earners who start to lose their personal allowance when they earn over £100,000. The personal allowance is reduced by £1 for every £2 of income above £100,000. This means your allowance is zero if your income exceeds £125,000, up only slightly from £123,700 in 2018/19.


The ISA annual subscription limit for 2019/20 will remain frozen at £20,000. However, the annual allowance for Junior ISAs and Child Trust Funds for 2019/20 will be uprated in line with Consumer Price Index inflation (CPI) to £4,368.


The annual allowance – the limit on the amount of pension contributions that can be made each year and qualify for tax relief – remains at £40,000 in 2019/20, but note that this may be lower depending on your individual circumstances.

The lifetime allowance will increase in line with inflation to £1,055,000 (from £1,030,000 in the 2018/19 tax year). This allowance is the maximum amount of pension savings you can amass over a lifetime without incurring a tax charge.

People who reached State Pension age before April 2016 receive the basic State Pension which will be increased by £3.25 a week to £129.20 a week (£125.95 in 2018/19).

Those who reached State Pension age after April 2016 will receive the single-tier state pension. If you are entitled to the full single-tier state pension, your weekly payments will increase from £164.35 to £168.60, an increase of £4.25 a week[6].

Capital gains tax

The annual tax-free allowance for capital gains tax, known as the ‘annual exempt amount’, will increase to £12,000[7].

Inheritance tax

When an individual dies, the value of their estate over the nil-rate band is liable to inheritance tax (IHT) at 40%, unless it is passed directly to a spouse or civil partner. A reduced rate of 36% is payable if at least 10% of your estate is left to charity.

The nil-rate band threshold in the 2019/20 tax year will remain frozen at £325,000. Married couples and civil partners can share their thresholds, transferring the unused element of their nil-rate band to their surviving spouse when they die. Doubling up the allowance means married couples or civil partners can pass on £650,000 tax-free before IHT becomes due.

In April 2017 an extra allowance was introduced when a residence is passed to a ‘direct descendant’. This is known as the residence nil-rate band (RNRB), and like the standard nil-rate band, any unused element can be transferred to a surviving spouse or civil partner. The amount of RNRB available is the lower of the value or share of the home left to the direct descendant or the maximum RNRB at the time of death.

In the 2019/20 tax year, the RNRB will be £150,000 per person (in the 2018/19 tax year it is £125,000 per person). This means a married couple with children will be able to pass on a maximum of £950,000 in total without having to pay IHT – two lots of £325,000 (£650,000) and two lots of £150,000 (£300,000).

Inheritance tax is a complex area but our financial planners can help you to use the available allowances to create a succession plan best suited to your family’s circumstances.

Property taxes

Landlords used to be able to claim tax relief on 100% of mortgage interest costs at their marginal rate (40% for higher-rate taxpayers; 45% for additional-rate taxpayers). That meant all landlords only paid tax on the difference between their expenses and income, their profit.

That changed in April 2017. In the 2018/19 tax year, landlords can only claim relief at their marginal rate on 50% of mortgage interest costs. On the remaining 50%, tax relief is restricted to the basic rate of income tax of 20%.

In the 2019/20 tax year, landlords will only be able to claim relief at their marginal rate on 25% of mortgage interest costs with the remainder qualifying for basic rate tax relief[8]. If you own a buy-to-let property, these changes may make it a less-appealing investment. Brewin Dolphin can help you explore alternatives to buy-to-let that are more liquid and tax-efficient.

How we can help

The use of allowances is a deceptively complex area, and professional advice can help you to maximise the potential of the various tax savings on offer. Brewin Dolphin’s financial planners can help you to build a tax-efficient financial plan that ensures you are making the most of the reliefs and allowances available to maximise returns on pensions, savings and other investments. Our experts can also introduce you to tax specialists where appropriate.


The value of investments and any income from them can fall and you may get back less than you invested.

Past performance is not a guide to future performance and performance is shown before charges which will reduce the illustrated performance.

This information is for illustrative purposes and is not intended as investment advice. Any tax advantages mentioned are based on personal circumstances and current legislation which are subject to change.

The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

Please note that this document was prepared as a general guide only and does not constitute tax or legal advice. While we believe it to be correct at the time of writing, Brewin Dolphin is not a tax adviser and tax law is subject to frequent change. Tax treatment depends on your individual circumstances, therefore you should not rely on this information without seeking professional advice from a qualified tax adviser.

The opinions expressed in this document are not necessarily the views held throughout Brewin Dolphin Ltd.

[1] Spring Statement 2019: Written Ministerial Statement, 13 March 2019.

[2] Office for Budget Responsibility: Economic and Fiscal Outlook – March 2019.

[3] Office for Budget Responsibility: Economic and Fiscal Outlook – March 2019.

[4] Office for Budget Responsibility: Economic and Fiscal Outlook – March 2019.

[5] Annex A: rates and allowances, 29 October 2018.

[6] Proposed benefit and pension rates 2019 to 2020, 23 November 2018.

[7] Annex A: rates and allowances, 29 October 2018.

[8] Changes to tax relief for residential landlords, 20 July 2016.