UK October 2018 Budget Comment - Blythe & Co Chartered Accountants

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 Personal allowance (age 65-74) Personal allowance (age 75 and over)	11,500 N/A N/A	11,850 N/A N/A	350 0 0
Income limit for under 65 personal allowance Income limit for age-related allowances	100,000 N/A	100,000 N/A	0 0
Married couple’s allowance for people born before 6 April 1935 Minimum amount of married couple’s allowance Blind person’s allowance	8,445 3,260 2,320	8,695 3,360 2,390	250 100 70
Capital Gains Tax annual exempt amount: Individuals etc. Trustees Main Rate Lower Rate Main Rate (for gains on residential property) Lower Rate (for gains on residential property)	11,300 5,650 20% 10% 28% 18%	11,700 5,850 20% 10% 28% 18%	400 200
Inheritance Tax Nil rate band limit Residence nil rate band limit Main Rate	325,000 100,000 40%	325,000 100,000 40%	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 (effective rate with tax credit)	7.5%	7.5%
Dividend upper rate – for dividends otherwise taxable at the higher rate (effective rate with tax credit)	32.5%	32.5%
Dividend additional rate – for dividends otherwise taxable at the additional rate (effective rate with tax credit)	38.1%	38.1%
Dividend allowance From April 2016, the new Dividend Allowance means that individuals will not have to pay tax on the first £5,000 of dividend income they receive.	£5,000	£5,000
Personal savings allowance From April 2016, the new Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive. 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%

Stamp Taxes – Rates from 4 December 2014

Transfers of property (consideration paid)

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.

Rate	All land in the UK
	Non-residential
Zero	£0-150,000
2%	£150,001 – 250,000
5%	£250,001

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