Budget Comment October 2018
Welcome to the first Autumn Budget in recent times.
There were no major changes to Income Tax, Capital Gains Tax, Inheritance Tax, VAT or Stamp Duty.
Special mention for Pensions
This is an increasingly complex area for which we recommend specialist advice but there are a few things to look out for:
- Personal Pension Annual Allowance is £40,000 (with potential bring forward of earlier year unused allowance) providing you have earned income of at least this level.
- If your total income exceeds £150,000 then this Annual Allowance tapers down to £10,000 once your total income reaches £210,000.
- There is a further restriction for those who have taken benefits from certain pensions. You could be restricted to contributions of £4,000 per annum
- The Lifetime Allowance is increased slightly to £1,055,000.
- Accessing funds has become more flexible.
Making Tax Digital
There’s a revolution on its way! Where there was once pen and ink there will soon be Applications, User Names and Passwords! First announced in the April 2015 Budget, making Tax Digital will affect us all. The timing is uncertain but we do know VAT will be the first to happen – watch this space! There is still a way to go before we know all the details but see the Making Tax Digital section here.
Please note: the comments above are brief highlights and each item is subject to change, please note the full chart of Rates and Allowances below and remember – there is always more to it than meets the eye so please contact us before taking or refraining from action.
Otherwise it is straight on to:
Rates and Allowances for 2018 and 2019
Rates and allowances for Income Tax, Corporation Tax, Capital Gains Tax, and Inheritance Tax are set out below.
|
2017-18 (£) |
2018-19 (£) |
Increase (£) |
Income Tax allowances |
|
|
|
Personal allowance |
11,500 |
11,850 |
350 |
Income limit for under 65 personal allowance |
100,000 |
100,000 |
0 |
Married couple’s allowance for people born before 6 April 1935 |
8,445 |
8,695 |
250 |
Capital Gains Tax annual exempt amount: |
11,300 |
11,700 |
400
|
Inheritance Tax |
325,000 |
325,000 |
0 |
Taxable bands 2017-18 (£) |
Taxable bands 2018-19 (£) |
||
Starting rate 10% |
– |
Starting rate 10% |
– |
Basic rate 20% |
0 – 33,500 |
Basic rate 20% |
0 – 33,500 |
Higher rate 40% |
33,501 – 150,000 |
Higher rate 40% |
33,501 – 150,000 |
Additional rate 45% |
Over 150,000 |
Additional rate 45% |
Over £150,000 |
Income tax rates |
|
|
|
Tax year 2017-18 |
Tax year 2018-19 |
Basic rate |
20% |
20% |
Higher rate |
40% |
40% |
Additional rate |
45% |
45% |
Dividend ordinary rate – for dividends otherwise taxable at the basic rate |
7.5%
|
7.5% |
Dividend upper rate – for dividends otherwise taxable at the higher rate |
32.5%
|
32.5% |
Dividend additional rate – for dividends otherwise taxable at the additional rate |
38.1% |
38.1% |
Dividend allowance |
£5,000 |
£5,000 |
Personal savings allowance Higher rate taxpayers will not have tax to pay on their first £500 of savings income. |
£1,000 £500 |
£1,000 £500 |
Starting rate for savings |
|
|
|
Tax year 2017-18 |
Tax year 2018-19 |
Starting rate for savings |
0% |
0% |
Starting rate limit for savings |
£5,000 |
£5,000 |
Corporation Tax profits 2017-18 (£) |
|
All profits – main rate 19% |
N/A |
Marginal relief |
N/A |
National Insurance
|
2017/2018 |
2018/2019 |
||||
Class 1 Employees |
||||||
On first |
£157 pw |
Nil |
£162 pw |
Nil |
||
Between |
£157 – £866 pw |
12% |
£162 – £892 pw |
12% |
||
Over |
£866 pw |
2% |
£892 pw |
2% |
||
Class 1 Employers |
||||||
On first |
£157 pw |
Nil |
£162 pw |
Nil |
||
Over |
£157 pw |
13.8% |
£162 pw |
13.8% |
||
Employers’ contracted-out rebate, salary related schemes |
N/A |
|
N/A |
|||
Employers’ contracted-out rebate, money purchase schemes |
Abolished |
|
Abolished |
|||
Class 2 Self employed |
||||||
Flat rate |
£2.85 pw |
|
£2.95 pw |
|||
Small earnings exception |
£6,025 pa |
|
£6,205 pa |
|||
Special Class 2 rate for share fisherman |
£3.50 pw |
|
£3.60 pw |
|||
Special Class 2 rate for volunteer development workers |
£5.65 pw |
|
£5.80 pw |
|||
Class 3 Voluntary |
||||||
Flat rate |
|
£14.25 pw |
|
£14.65 pw |
||
Class 4 Self employed |
||||||
On profits between |
£8,164 – £45,000 pa |
9% |
£8,424 – £46,350 pa |
9% |
||
|
above £45,000 |
2% |
above £46,350 |
2% |
Rate |
All land in the UK |
Rate |
All land in the UK |
|
Residential |
|
Additional residential property |
Zero |
£0-125,000 |
3% |
£0-125,000 |
2% |
On next £125,00 |
5% |
On next £125,00 |
5% |
On next £675,000 |
8% |
On next £675,000 |
10% |
On next £575,000 |
13% |
On next £575,000 |
12% |
On the rest (above) £1,500,000 |
15% |
On the rest (above) £1,500,000 |
Previously, SDLT was charged at a single rate for the entire price of a property. From 17 March 2017, SDLT is charged at increasing rates for each portion of the price.
The rate of stamp duty / stamp duty reserve tax on the transfer of shares and securities is unchanged at 0.5% for 2014-15.
Value Added Tax (VAT) |
||
|
April 2017-18 |
April 2018-19 |
Standard rate |
20% |
20% |
Reduced rate |
5% |
5% |
Zero rate |
0% |
0% |
Exempt |
n/a |
n/a |
Value Added Tax (VAT) – Registration and Deregistration thresholds |
||
|
From April 2017 |
From April 2018 |
VAT – registration threshold |
85,000 |
85,000 |
VAT – deregistration threshold |
83,000 |
83,000 |