April 2018/19 Tax Year Changes – What you should be aware of
It is that time of year again when HMRC will implement the changes announced in the Autumn 2017 budget by the Chancellor of the Exchequer. These changes will come into effect starting from the new tax year on 6 April 2018.
What has changed?
Income tax
Personal allowance will increase to £11,850. The £350 increase from the previous tax year will lead to a reduction in tax of £70 for most people.
The threshold from when you start paying income tax at the higher rate of 40% will increase to £46,350 (2017/18 £45,000).
The tax free dividend allowance is set to decrease from £5,000 to £2000 from the new tax year. The change will see a basic rate tax payer paying an additional £225 of income tax on dividends paid by their company in the 2018/19 tax year.
Benefit in kind tax rates are increasing from the new tax year. Main changes are:
| CO2 emission range | 2017/18 % applied to list price | 2018/19 % applied to list price |
| 0 – 50 | 9% | 13% |
| 51 – 75 | 13% | 16% |
| 76 – 94 | 17% | 19% |
The diesel supplement applied on top of the above calculated percentage will increase from 3% to 4% with the effect of increasing the taxable benefit on diesel cars.
Car fuel benefit charge multiplier will increase to £23,400 (2017/18 £22,600).
Flat rate van benefit charge will increase to £3,350 (2017/18: £3,230).
Flat rate van fuel benefit charge will increase to £633 (2017/18: £610).
Capital Gains
The capital gains tax annual exempt amount will increase in line with the consumer price index to £11,700 (2017/18: £11,300).
Pensions
The maximum amount you can draw from pensions without a tax charge shall rise to £1.03million in line with inflation.
Inheritance tax
From 6 April 2018 the value of the additional nil rate band will increase by £25,000 to £125,000.
Auto-Enrolment
Minimum employer contribution towards employee’s workplace pension will increase by 1% from the new tax year.
National Living and National Minimum wage
The minimum hourly wage rate your staff are entitled to depends on their age and whether they are an apprentice. The rates will increase from the new tax year. For 18-24 year olds, this will be the largest increase seen in a decade.
Residential finance costs
From 6 April 2017, landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive basic rate reduction from their income tax liability. This restriction is being gradually introduced from 6 April 2017.
Conclusion
Our summary of this year’s budget is intended to give you a snapshot of the upcoming changes. There are a number of critical changes in this year’s budget so it’s critical that you plan for these implications to be mitigated. Speak with our team to find out more about how we can help you.
Author
Sonal Dewedi