6 April 2018 will see the start of a new of tax year and the implementation of many new tax rates and allowances, we have focused on the ones which will affect most of our customers. The full details of all the changes taking place can be found here.
You will pay less tax in 2018-19 due to the personal allowance increasing by £350 up to £11,850.
The basic rate band is also being extended which will mean someone earning £46,000 as salary will pay around £200 less in tax.
If you claim marriage allowance, there is a two-fold benefit; the income limit is increasing by £900 to £28,900 and the transferrable amount is rising by £40 to £1,190 per year.
National Insurance (NI) allowances are increasing by £5 per week. This will save £31.20 per year for basic rate tax payers. NI limits are rising for the self-employed too, saving them around £23 per year.
The small profits threshold for Class 2 NI is rising by £180 per year to £3,025. However, we would normally recommend you pay this voluntarily if possible as it’s the cheapest way to obtain a state pension stamp for the year.
The annual exempt amount for capital gains tax (CGT) has increased to £11,700 per year. This means you can make £400 more in gains before you start paying tax.
Things Staying the Same
The percentage rates of taxes are all staying the same. As is the starting rate limit for savings.
The savings rate has created a potentially fantastic tax planning opportunity for directors whose limited company owes them money. If that’s you, get in touch now!
Tax credits are all staying the same, along with child benefits.
Corporation tax is staying at 19% and is expected to reduce to 17% in 2020.
The VAT rate and registration thresholds are both staying the same. Although the government is reviewing whether to reduce the registration threshold to bring it in line with Europe.
The main tax increase is around income tax on dividends. The tax-free allowance is decreasing from £5,000 to £2,000. This is a £225 increase on basic rate taxpayers and £975 to higher rate. With even more for additional rate earners.
Company car tax rates all increase by 3% points from 6th April 2018. And the diesel surcharge increases to 4% from 3% on the same date.
Business rate multipliers are increased to 48.0p for small businesses. This will mean a 3% increase in business rates.