With the new tax year approaching, and following the Spring Budget, here is our guidance on what this means for your personal tax.
You may wish to read our blog on what the new tax year means for your business here.
We also have a blog on our 5.5 Top Tax Tips to action before the end of the 2018 tax year.
Download our free App for more detailed info on tax rates, thresholds.
1. The Personal allowance increases from £11,500 to £11,850.
This means you can earn £11,850 before paying any personal tax.
If you’re a director you could now pay yourself up to £11,850 or £987.50 per month.
Top Tip: You will lose your personal allowance if your income is over £100,000
2. The basic rate tax band will be £34,500 (increase from £33,500)
£1,000 extra income at 20%
Basic rate dividend tax is 7.5%
3. 40% Higher rate tax starts at £46,350. 45% Additional Higher Rate starts at £150,000
Higher rate dividend tax is 32.5%. Additional higher rate dividend tax is 38.10%
Top Tip: Speak to our independent financial advisor Kevin Morris to see how you can reduce your higher rate tax
4. National Insurance threshold increases to £8,424 from £8,164.
Directors who do not wish to pay NIC, but still remain eligible for statutory entitlements and benefits should pay themselves £8,424 per year, or £702 per month.
5. The Savings Income rate remains at £1,000.
UK basic and higher rate taxpayers can receive interest income up to £1,000 per year without paying income tax.
6. The Dividend allowance reduces from £5,000 to £2,000
This means additional income tax of £225 per year (£3,000 x dividend tax of 7.5%)
Basic rate dividend tax is 7.5% (for dividends above the tax free allowance, and up to the higher rate threshold of £46,500)
Higher rate dividend tax is 32.5%
Additional higher rate dividend tax is 38.10%
Top Tip: Make sure you use your 2017/18 dividend allowance of £5,000! #useitorloseit
7. Annual Pension Contribution limit £40,000
This remains unchanged – consider whether you should make personal or employer pension contributions (get in touch to chat through your options)
8. Married Couple’s Allowance up to £1,185 can be transferred to your Spouse
As long as both of you are basic rate taxpayers, and one of you has spare Personal Allowance
9. Stamp Duty Tax Relief for First Time Buyers up to £500,000
For first time buyers purchasing residential property up to £500k, no stamp duty land tax will be charged. As long as the property will be their only or main residence.
10. Alcohol Prices Freeze but Tobacco tax rises at inflation plus 2%
However duty will rise with inflation for high-strength, low-cost drinks like white cider.
I hope you found the above facts useful, as always do get in touch to discuss any of the points mentioned. Please keep an eye on our blog page for more useful posts!
Thank you for reading!
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