Personal
Personal Allowance
The tax-free personal allowance will increase from £11,500 to £11,850 from 6 April 2018.
Higher Rate Tax Threshold
The basic rate threshold will increase from £33,500 to £34,500 as of 6 April 2018. This means for most people the higher rate threshold will increase to £46,350.
Different thresholds may apply in Scotland.
Capital Gains Tax
The capital gains tax (CGT) annual allowance will increase from £11,300 to £11,700 for individuals and from £5,650 to £5,850 for most trustees of a settlement from 6 April 2018.
The government’s intention to introduce a 30-day payment window for CGT payments due on the disposal of residential property will be deferred until April 2020.
With effect from 22 November 2017, the transitional provision which excluded sums of carried interest arising after 8 July 2015 and in connection with the disposal of a partnership will be removed, irrespective of any connection with disposals made prior to 22 October 2015. This means asset managers will pay CGT on their full economic gain.
National Insurance Contributions
The implementation of the proposed reforms to the national insurance contributions (NICs) system, to include the abolition of class 2 NICs, will be delayed by a year and will now take effect from April 2019.
As previously announced, the proposal to increase class 4 NICs from 9% to 10% in April 2018 and then to 11% in 2019 will no longer proceed.
National Living & National Minimum Wage
The national living wage will be increased from £7.50 to £7.83 per hour from April 2018, for those aged 25 and over.
The national minimum wage rates will also increase as follows:
- apprentices: £3.70 per hour
- 16 and 17-year-olds: £4.20 per hour
- 18 to 20-year-olds: £5.90 per hour
- 21 to 24-year-olds: £7.38 per hour.
Marriage Allowance
Legislation will be introduced in the forthcoming Finance Bill to enable individuals whose spouse or civil partner is deceased to make a claim for the allowance.
Provided the entitlement conditions are met, the claim can be backdated for up to 4 years.
Savings & Pensions
The 0% starting rate for savings will be maintained at the current level of £5,000 for 2018/19.
The annual subscription limit for an individual savings account (ISA) remains unchanged at £20,000 for the 2018/19 tax year. The annual subscription limit for junior ISAs and child trust funds will increase from £4,128 to £4,260 from 6 April 2018.
The pension lifetime allowance will increase to £1.03 million for the 2018/19 tax year.
Gift Aid Donor Benefits
The current mix of monetary and percentage thresholds that determine the value of benefit a charity can give to donors will be changing as of 6 April 2019.
The new thresholds will be as follows:
- the benefit threshold for the first £100 of the donation will remain at 25% of the amount of the donation
- charities will be able to offer an additional benefit of up to 5% on donations on the amount in excess of £100.
The total value of benefit a donor can receive from the charity will remain at £2,500.
Personal
Mileage Rates for Landlords
Landlords running unincorporated property businesses made up of only individuals will be able to use mileage rates to calculate a deduction for motoring expenses from 6 April 2017.
Previously, landlords could only technically claim a deduction for actual motoring expenses incurred and capital allowances for the cost of the vehicle.
Venture Capital Schemes
An increase to the annual amount an individual can invest under the enterprise investment scheme (EIS) in knowledge-intensive companies will take effect from 6 April 2018.
Provided that anything above £1m is invested in knowledge-intensive companies, an individual can invest up to £2m in total.
A knowledge-intensive company is regarded as a smaller innovative company carrying out research and development and other activities to develop intellectual property for its own trading purposes.
A new ‘risk to capital condition’ will be introduced for investments made on or after 6 April 2018 when deciding whether an investment qualifies for tax relief using the EIS, seed enterprise investment scheme (SEIS) and venture capital trusts (VCTs).
The condition has 2 elements. First, the company should have entrepreneurial objectives to grow and develop. Second, there should be a significant risk of a loss of capital to the investor greater than the net return. The net return is considered to be income or capital growth and any income tax relief.
Termination Payments
Individuals who have their employment contract terminated on or after 6 April 2018 will no longer be able to claim foreign service relief if they are UK resident in the tax year of termination.
The statutory residency test will be used to determine an employee’s residency status and the existing £30,000 income tax exemption will continue to be available, where applicable.
The withdrawal of the foreign service exemption will not apply to seafarers.
Qualifying Care Relief
A carer previously excluded from the qualifying care relief scheme because the person they look after self-funded their care, will be entitled to use the simplification scheme for 2017/18 onwards, instead of only being entitled to claim for expenses they actually incur.
The person funding the care will be required to pay the carer through an approved shared lives scheme.
Venture Capital Trusts
A measure is announced that seeks to limit the scope of an anti-abuse rule relating to share buybacks by VCTs.
The rule restricts income tax relief for investors who sell shares in a VCT and subscribe for new shares in the same or another VCT within a 6-month period, where those VCTs merge.
This rule will no longer apply if those VCTs merge more than 2 years after the subscription, or do so only for commercial reasons.
The change will have effect for VCT subscriptions made on or after 6 April 2014.
Personal
Tax Tables
Registered Pensions
| Lifetime allowance limit | £1.03 million |
| Annual allowance limit | £40,000* |
| Money purchase annual allowance | £4,000 |
| Individuals | £3,600 or 100% of NRE to £40,000* |
| Employers | £40,000* less employee contributions |
| Minimum age to access benefits | 55 |
| On cumulative benefits exceeding | £1.03 million |
*Tapered at a rate of 50% of income to £10,000 if threshold income over £110,000 and adjusted income over £150,000. Subject to certain conditions, the unused amount of the annual allowance can be carried forward up to 3 years and used once the current year annual allowance has been fully utilised.
Taxable Band and Rates
| 2018/2019 | 2017/2018 | |
| Starting rate* of 0% on savings up to | £5,000 | £5,000 |
| Basic rate band | £34,500 | £33,500 |
| Higher rate band | £34,501 – £150,000 | £33,501 – £15,000 |
| Additional rate band | > £150,000 | > £150,000 |
| Basic rate | 20% | 20% |
| Higher rate | 40% | 40% |
| Additional rate | 45% | 45% |
| Dividend ordinary rate | 7.5% | 7.5% |
| Dividend upper rate | 32.5% | 32.5% |
| Dividend additional rate | 38.1% | 38.1% |
* The starting rate does not apply if taxable non-saving income exceeds the starting rate limit.
Tax Allowances
| 2018/2019 | 2017/2018 | |
| Personal allowance* | £11,850 | £11,500 |
| Personal savings allowance: | ||
| Basic rate | £1,000 | £1,000 |
| Higher rate | £500 | £500 |
| Dividend allowance | £2,000 | £5,000 |
| Marriage allowance** | £1,185 | £1,150 |
| Training allowance*** | £1,000 | £1,000 |
| Property allowance*** | £1,000 | £1,000 |
| Rent-a-room allowance | £7,500 | £7,500 |
| Blind person | £2,390 | £2,320 |
* The personal allowance is reduced by £1 for each £2 of income from £100,000 to £123,700 (2017/18, £123,000).
** Any unused personal allowance maybe transferred to a spouse or civil partner who is not liable to higher or additional rate tax.
*** Note that landlords and traders with gross income from this source in excess of £1,000 can deduct the allowance from their gross income as an alternative to claiming expenses.
Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice.
Data reproduced with the kind permission of PracticePro