Foster Denovo|News & opinion|Start of the 2018/19 tax year – what’s new?

Start of the 2018/19 tax year – what’s new?

The 2018/19 tax year starts on 6th April, marking several changes to tax and other related matters that could make you richer… or poorer.

Although there was no Spring Budget this year, it does not mean that the usual raft of tax changes have disappeared. Most of these were announced in November 2017’s Autumn Budget. However, Scotland has also recently approved a new set of income tax rates and bands.

We’ve summarised some of the more important changes that take effect for 2018/19:

  • The personal allowance rises by £350 to £11,850. However, the allowance will still be phased out at £1 per £2 of income over £100,000, leaving an effective 60% (61.5% in Scotland) tax band for between £100,000 and £123,700.
  • The higher rate threshold will rise by £1,350 to £46,350.
  • Scotland will see several changes to income tax. A new ‘starter rate’ of 19% applies to the first £2,000 of taxable income and an ‘intermediate rate’ of 21% applies to taxable income between £12,150 and £31,580. The higher rate threshold will increase by £430 to £43,430 and the higher rate will rise by 1% to 41%.
  • National Insurance Thresholds rise, with the starting point for Class 1 (employers and employees) and Class 4 (self-employed) becoming £8,424 a year. For employees and the self-employed the upper limit for full rate contributions will also rise in line with the non-Scottish higher rate threshold (to £46,350).
  • The dividend allowance will fall from £5,000 a year to £2,000 a year, reducing a higher rate taxpayer’s net income by up to £975.
  • Company car scale rates will generally rise by 2% for petrol vehicles and 3% for diesels. The proportionate increase in tax can be more than those numbers suggest. For example, on a BMW 320d the charge rises from 24% to 27%, increasing the tax payable by one-eighth.
  • The pension lifetime allowance will increase for the  first time  since 2010, albeit only by £30,000 to £1,030,000.
  • Pension automatic enrolment minimum contributions will rise. In most instances that will mean a doubling for employers and a 150% increase for employees.

The number of changes, both positive and negative, can make April pay checks puzzling if you are an employee. This is just one reason why the start of the tax year is a good time to talk to your financial adviser.

 

The value of tax reliefs depends on your individual circumstances.

Tax laws can change.

The Financial Conduct Authority does not regulate tax advice.

 

 

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