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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
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