Personal Taxation

Income tax allowances and reliefs

2018/19

2017/18

Personal (basic)

£11,850

£11,500

Personal reduced by £1 for every £2 of net income over

£100,000

£100,000

Transferable tax allowance for married couples/civil partners

£1,185

£1,150

Married couples/civil partners (minimum) at 10%1

£3,360

£3,260

Married couples/civil partners (maximum) at 10%1,2

£8,695

£8,445

Blind person’s allowance

£2,390

£2,320

Rent-a-room tax-free income

£7,500

£7,500

Property allowance and Trading allowance (each)

£1,000

£1,000

Venture capital trust (VCT) at 30%

£200,000

£200,000

Enterprise investment scheme (EIS) at 30%

£1,000,000

£1,000,000

–EIS knowledge intensive companies at 30% additional amount

£1,000,000

N/A

–EIS eligible for capital gains tax deferral relief

No limit

No limit

Seed EIS (SEIS) at 50%

£100,000

£100,000

– SEIS CGT reinvestment relief

50%

50%

Registered pension scheme

   

• annual allowance3

£40,000

£40,000

• money purchase annual allowance

£4,000

£4,000

• lifetime allowance

£1,030,000

£1,000,000

1 Where at least one spouse/civil partner was born before 6/4/35.

2 Reduced by £1 for every £2 of income over £28,900 (£28,000 2017/18), until the minimum is reached.

3 50% taper down to £10,000 if threshold income is over £110,000 and adjusted income is over £150,000.

Rates

2018/19

2017/18

Basic rate of 20% on income up to:

UK (excl. Scotland)

£34,500

£33,500

Scotland4

TBA5

£31,500

Higher rate of 40% on income over:

UK (excl. Scotland)

£34,500

£33,500

Scotland4

TBA5

£31,500

Additional rate of 45% on income over:

UK (excl. Scotland)

£150,000

£150,000

 

Scotland4

TBA5

£150,000

Starting rate at 0% – on savings income up to6

£5,000

£5,000

Savings allowance at 0% tax:

basic rate taxpayers

£1,000

£1,000

higher rate taxpayers

£500

£500

additional rate taxpayers

£0

£0

Dividend allowance at 0% tax – all individuals

£2,000

£5,000

Tax rate on dividend income:

basic rate taxpayers

7.5%

7.5%

higher rate taxpayers

32.5%

32.5%

additional rate taxpayers

38.1%

38.1%

 

Trusts

   

• standard rate band generally

£1,000

£1,000

• dividends (rate applicable to trusts) 38.1% 38.1%

38.1%

38.1%

• other income (rate applicable to trusts) 45% 45%

45%

45%

Child benefit charge:
1% of benefit per £100 of income between £50,000 and £60,000.

4 For non-dividend, non-savings income only: otherwise apply UK (excl. Scotland) band.

5 To be announced – Scottish Budget to be published 14/12/17

6 Not available if taxable non-savings income exceeds the starting rate band.

Income tax

The personal allowance will increase to £11,850 and the higher rate threshold will rise to £46,350 for 2018/19. The Scottish tax bands and rates for non-savings, non-dividend income will be announced in the Scottish Budget due on 14 December.

Private sector off-payroll working

Following reform in April 2017 of the off-payroll working rules (IR35) for public sector engagements, the government will consult on extending the legislation to the private sector.

National insurance contributions (NICs)

The government will delay the implementation of the NIC reforms by one year as previously announced. Consequently, Class 2 NICs will continue to be payable in 2018/19.

Employment status

The government will publish a discussion paper in response to Matthew Taylor’s review of employment practices in the modern economy. The paper will examine the case and options for longer-term reform to make the employment status tests clearer for both employment rights and tax.

Benefits in kind: charging electric vehicles

From April 2018, there will be no benefit in kind tax charge on electricity that employers provide where employees recharge their personally-owned electric or hybrid vehicles at their workplace.

Taxation of employee business expenses

There will be several changes to the taxation of employee expenses:

  • The government will consult on extending the scope of tax relief currently available to employees and the self-employed for work-related training costs.
  • From April 2019, employers will not have to check receipts when reimbursing employees for subsistence using scale rates.
  • HMRC will improve the guidance on employee expenses, particularly on travel and subsistence, and the process for claiming tax relief on non-reimbursed employment expenses.

Termination payments: foreign service relief

Employees who are UK resident in the tax year their employment is terminated will not be eligible for foreign service relief on their termination payments. Reductions for foreign service will be retained for seafarers. The changes will have effect from 6 April 2018 and will apply to those who have their employment contract terminated from that date.

Rent-a-room relief

The government will call for evidence to establish how rent-a-room relief is used and to ensure that it is better targeted at longer-term lettings.

Mileage rates for landlords

With retrospective effect from 6 April 2017, individuals operating unincorporated property businesses can opt to use a fixed rate deduction for every mile they travel for business journeys by car, motorcycle or goods vehicle.

Gift aid donor benefit rules

The donor benefit rules that apply to charities that claim gift aid tax relief on donations will be simplified from April 2019. There will be two percentage thresholds: the benefit threshold for the first £100 of the donation will remain at 25%; for larger donations charities will be able to offer benefits worth up to 5% of the amount above £100. The total value of the benefit must not exceed £2,500.

Taxation of trusts

A consultation document will be published in 2018 on how to make the taxation of trusts simpler, fairer and more transparent.

saver

Don’t lose your personal allowance. Your personal allowance of £11,850 in 2018/19 is reduced by 50p for every pound your income exceeds £100,000. Make a pension contribution or a charitable gift to bring your income below £100,000.

 

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