Come April 2018, there will be changes to tax rates, allowances, and exemptions. The changes will affect private clients, corporate and business, property, and employment.
Allowances and Reliefs
- Personal allowance
For the tax year 2018/19, the personal allowance will have an increase of £350, effectively increasing it from £11,500 to £11,850. 10% of this amount can be transferred between spouses or civil partners, provided that neither of them is a higher rate taxpayer.
- Savings allowance for basic rate taxpayer and higher rate taxpayer remains the same at £1,000 and £500, respectively.
- High income child benefit charge threshold is also the same at £50,000.
Tax Rates and Bands of Individual Income
- Starting rate limit remains at £5,000
- Basic rate band is now at £1 – £34,500 from the previous £1 – £33,500
- Higher rate band is now at £34,501 – £150,000 from the previous £33,501 – £150,000
- Additional rate band stays the same at over £150,000
Tax rate remains the same with the starting rate for savings income (0%), basic rate (20%), higher rate (40%), and additional rate (45%).
Pension Contribution List
- Lifetime allowance has an increase of £30,000, amounting to £1,030,000 from the previous £1,000,000.
- Annual allowance and money purchase annual allowance remain at £40,000 and £4,000, respectively.
There also changes to the National Insurance Contribution (NIC) which you should familiarise. NIC for Class 4 self employed, for example, must contribute 9% on profits over £8,424 to £46,350 and an additional 2% on profits more than £46,350.
Make sure to refer to HMRC and tax-related materials for your guidance.