Tax changes 2018/19

April 02, 2018 by Camila Latacz

Tax changes 2018/19

April 02, 2018 by Camila Latacz

With the financial statement behind and new tax year 2018/19 is on our doorstep, in this blog post we will take a quick dive and review upcoming changes to personal, corporation and national insurance tax.

Personal tax

As the table below shows the percentages have not change since last tax year. The Personal Allowance has been increased by £350, which means that the first £11,850 of income is now tax free.

Income Income tax % Dividends tax %
£11,850 Personal allowance Personal allowance
£46,350 20% 7.5%
£150,000 40% 32.5%
Above 45% 38.1%

Please note that the changes in Scottish tax has not been taken into account in this post.


If you have additional income as your salary, the amount above £11,850 would be taxed at basic rate at 20% up to £46,350, then higher tax rate at 40% up to £150,000 of earnings, and the additional rate of tax at 45% on the earning above £150,000.

The income limit for personal allowance stays without a change. As before the personal allowance will start reducing, on earnings above £100,000, £1 for each £2 of earnings and at £123,700 and above is reduced to £0.

Dividend allowance has been reduced from £5,000 to £2,000, which means that now only the first £2,000 dividends are tax free.

National Insurance bands

Earnings Employee NI % Employer NI % NI Class 4
£8,424 0% 0% 0%
£46,350 12% 13.8% 9%
Above 2% 13.8% 2%

The 2018/19 employment allowance has been set at the level of £3,000 with the same restriction as last year, which means that it is not available for the businesses where only single person on the payroll is also a director, i.e. ‘single director employee’ limited companies.

Capital gains tax

The new capital gains tax exemption threshold has been increased to £11,700.

Pension contributions

Annual allowance for pension contribution stays at £40,000 per annum and lifetime allowance increase to £1,030,000.

Pension auto-enrolment

The percentages for pension under auto-enrolment are changing gradually:

Period Employee % Employer %
Up to 06/04/2018 1% 1%
06/04/2018 to 05/04/2019 3% 2%
From 06/04/2019 5% 3%

Corporation tax

The 2018/19 brings no change to corporation tax level which remains at 19%.

Financial Year Corporation tax %
2016 20%
2017 19%
2018 19%
2019 19%
2020 17%

We are hopeful that the government fulfils the promise of 17% corporation tax, but have to wait two more years to see.

VAT

The major change to be recorded here is that we have to start preparing for Making Tax Digital – MTD, which will change the way we submit VAT return. From April 2019 we need to send all VAT returns digitally, submitted straight from the software, rather than input the numbers to HMRC website. It will compulsory for each business which is above the current VAT threshold of £85,000.

Address

Opening Times

Reg office: Candal Accountancy Limited, 43 Foxboro Road, Redhill, Surrey RH1 1TD, Tel: 01737 309911, Email: info@candal.co.uk
Reg number: 11038100 Registered in England and Wales.
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