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TAXABLE INCOME BANDS AND TAX RATES

 

2018/19

2017/18

Starting rate* of 0% on savings up to

£5,000

£5,000

Basic rate band

£34,500

£33,500

Higher rate band

£34,501 – £150,000

£33,501 – £150,000

Additional rate band

Over £150,000

Over £150,000

Basic rate

20%

20%

Higher rate

40%

40%

Additional rate

45%

45%

Dividend ordinary rate

7.5%

7.5%

Dividend upper rate

32.5%

32.5%

Dividend additional rate

38.1%

38.1%

* The starting rate does not apply if taxable income exceeds the starting rate limit.

Income tax in Scotland

 

2018/19

2018/19 rates

2017/18

2017/18 rates

Starter rate band

£2,000*

19%

 

 

Basic rate band

£2,001 – £12,150

20%

£31,500

20%

Intermediaterate band

£12,151 – £32,423

21%

 

 

Higher rate band

£32,424 – £150,000

41%

£31,501 – £150,000

40%

Top/additional rate band

Above £150,000

46%

Above £150,000

45%

*Assumes individuals are in receipt of the personal allowance.

Allowances that reduce taxable income or are not taxable

 

2018/19

2017/18

Personal allowance*

£11,850

£11,500

Personal savings allowance:
Basic rate taxpayer
Higher rate taxpayer
Additional rate taxpayer   

 

£1,000
£500
£0

 

£1,000
£500
£0

Dividend allowance at 0%

£2,000

£5,000

Marriage/civil partner transferable allowance**

£1,185

£1,150

Trading allowance and property allowance each***

£1,000

£1,000

Rent a room allowance

£7,500

£7,500

Blind person’s allowance

£2,390

£2,320

* The personal allowance is reduced by £1 for each £2 of income from £100,000 to £123,700 (2017/18, £123,000).
** Any unused personal allowance maybe transferred to a spouse or civil partner who is not liable to higher or additional rate tax.
*** Note that landlords and traders with gross income from each of these sources in excess of £1,000 can deduct the allowance from their gross income as an alternative to claiming expenses.

Allowances that reduce tax

 

2018/19

2017/18

Married couples’/civil partners’ allowance (MCA) tax reduction

£869.50

£844.50

Available to people born before 6 April 1935. The age for MCA is that of the elder spouse or civil partner. The loss of tax reduction is 10p for each £2 of income above £28,900 (2017/18, £28,000) until £336 (2017/18, £326) is reached.

High income child benefit charge

 

2018/19

2017/18

Threshold

£50,000

£50,000

There is a tax charge of 1% of the child benefit received for each £100 that the threshold is exceeded up to a maximum of 100%.

VEHICLE AND FUEL BENEFITS IN KIND

The taxable benefit in kind (BIK) is calculated as a percentage of the car’s UK list price. The percentage depends on the car’s CO2 emissions in grams per kilometre (g/km). Diesel cars which are certified to RDE2 standard are treated as petrol-fuelled.

Emissions

Petrol              

Diesel

0 – 50g/km

13%                      

17%

51 – 75g/km

16%                   

20%

76 – 94g/km

19%                    

23%

Over 94g/km

add 1% for every 5g/km or part thereof              

180g/km* and over

 37% maximum                               

*Over 159g/km for diesel.

The list price is on the day before first registration, including most accessories and is reduced by any employee’s capital contribution (max £5,000) when the car is first made available.

Where the cost of all fuel for private use is borne by the employee, the fuel benefit is nil. Otherwise, the fuel benefit is calculated by applying the car benefit percentage (above) to £23,400 (2017/18, £22,600).

Vans where private use is more than home to work travel; £3,350 (2017/18, £3,230) benefit and £633 (2017/18, £610) for private fuel. Payments by employees for private use may reduce these BIK. Vans with zero emissions have a benefit of £1,340 (2017/18, £646).

TAX-FREE MILEAGE ALLOWANCES

Cars and vans

First 10,000 business miles

45p

Thereafter

25p

Motorcycles

24p

Bicycles

20p

Business passenger

5p

For national insurance purposes: 45p for all business miles for cars and vans.

CAPITAL GAINS TAX

 

2018/19

2017/18

Main rates

Individual basic rate

10%

10%

Individual above basic rate

20%

20%

Trusts and estates

20%

20%

Gains on residential property not eligible for PPR relief and carried interest - surcharge

8%

8%

Annual exemption

Individuals

£11,700

£11,300

Trusts

£5,850

£5,650

Entrepreneurs’ relief

Applicable rate

10%

10%

Lifetime limit

£10m

£10m

Investors’ relief

Applicable rate

10%

10%

Lifetime limit

£10m

£10m

INHERITANCE TAX

 

2018/19

2017/18

Nil-rate band threshold*

£325,000

£325,000

Main residence nil-rate band**

£125,000

£100,000

Combined threshold limit for married couples and civil partners, including main residence nil-rate band

£900,000

£850,000

* Up to 100% of any unused part of a deceased person’s nil-rate band can be claimed by the surviving spouse/civil partner on their death.This also applies to the main residence nil-rate band, albeit the main residence nil-rate is subject to the taper withdrawal below.
** For estates worth in excess of £2m, a 50% taper withdrawal applies.

Tax rates

 

2018/19

2017/18

Main rate

40%

40%

Chargeable on lifetime transfers

20%

20%

Transfers on or within 7 years of death*

40%

40%

Reduced rate**

36%

36%

*All lifetime transfers not covered by exemptions and made within 7 years of death will be added back into the estate for the purposes of calculating the tax payable. This may then be reduced as shown in the next table.
** Applies if 10% or more of net estate given to charity.

Years before death

0 – 3

3 – 4

4 – 5

5 – 6

6 – 7

Tax reduced by

0%

20%

40%

60%

80%

UK COMPANY TAXATION

Financial year from 1 April

2018

2017

Corporation tax rate

19%

19%

Loans to participators

32.5%

32.5%

Diverted profits tax

25%

25%

MAIN CAPITAL ALLOWANCES

Initial allowances

First-year allowance: for certain environmentally beneficial equipment, new and unused electric and low CO2emission cars (up to 50g/km)

100%

Annual investment allowance:
on first £200,000 (excludes cars)

100%

Writing down allowances

Other plant and machinery

18%

Long-life assets, integral features of buildings, thermal insulation

8%

Cars

51g/km – 110g/km

18%

Over 110g/km

8%

Patent rights and know-how – annual reducing balance

25%

VALUE ADDED TAX

From 1 April

2018

2017

Standard rate

20%

20%

VAT fraction

1/6

1/6

Reduced rate e.g. on domestic fuel

5%

5%

VAT fraction

1/21

1/21

Taxable turnover limits

From 1 April

2018

2017

Registration (last 12 months or next 30 days) over

£85,000

£85,000

Deregistration (next year) under

£83,000

£83,000

Registration for distance selling into the UK (last 12 months or next 30 days) over

£70,000

£70,000

Annual and cash accounting schemes turnover limit

£1.35m

£1.35m

Flat rate scheme

£150,000

£150,000

RESEARCH AND DEVELOPMENT COSTS

Research and development (R&D)

Revenue expenditure – SMEs

230%

Capital expenditure – all companies

100%

Large company R&D taxable expenditure credit*

12%

*Effective from 1 January 2018, replacing previous rate of 11%. 

TAX-EFFICIENT INVESTMENTS

Annual investment limit

2018/19

2017/18

ISA

£20,000

£20,000

Lifetime ISA

£4,000

£4,000

Help to Buy ISA

£1,000 initial and £200 per month

Junior ISA and Child Trust Fund

£4,260

£4,128

Venture Capital Trust at 30%

£200,000

£200,000

Enterprise Investment Scheme (EIS) at 30%

£2m*

£1m

Seed EIS (SEIS) at 50%

£100,000

£100,000

SEIS capital gains tax reinvestment relief

50%

50%

Social investment tax relief at 30%

£1m

£1m

*Amounts over £1m must be in a knowledge-intensive company.

REGISTERED PENSIONS

Lifetime allowance limit

£1.03m

Money purchase annual allowance

£4,000

Annual allowance limit

£40,000*

Minimum age for accessing benefits

55

On cumulative benefits exceeding

£1.03m

*Tapered at a rate of 50% of income down to £10,000 if threshold income over £110,000 and adjusted income over £150,000.

Subject to certain conditions, the unused amount of the annual allowance can be carried forward up to 3 years and used once the current year annual allowance has been fully utilised.

NATIONAL INSURANCE

Class 1

Employee

Employer

Earnings per week

Up to £162                              nil*

Up to £162                              nil

From £162.01 to £892      12%                                                               

Over £162                      13.8%**

Over £892                               2%

 

Over state pension age        0%

Over state pension age  13.8%

* Entitlement to contribution-based benefits are retained for earnings between £116 and £162 per week.
** 0% for employees under 21 and apprentices under 25 on earnings up to £892 per week.

Class 1A

On relevant benefits, including car and fuel benefits

13.8%

Class 2

Self-employed above small profits threshold

£2.95 per week

Small profits threshold

£6,205 per annum

Class 3

Voluntary

£14.65 per week

Class 4*

Self-employed on profits £8,424-£46,350

9%

Over £46,350

2%

* Exemption applies if the state retirement age is reached by 6 April 2018.

Employment allowance


Per employer, per year (excluding 1-person companies)

£3,000*

*1 claim only for companies in a group or under common control. Not available where the director is the only employee paid earnings above the secondary threshold for class 1 national insurance contributions.

Apprenticeship levy

A levy of 0.5% applies where the pay bill exceeds £3m. There is an allowance of £15,000. Further conditions apply so please consult with us.

PROPERTY TAXES

The incremental rate of tax is only payable on the part of the property price within each band.

An additional 3% rate applies to certain second properties above £40,000 for all 3 taxes.

England, Wales and Northern Ireland – stamp duty land tax

From 22 November 2017 (reverts to land transaction tax in Wales from 1 April 2018).

On the transfer of residential property                    

On the transfer of non-residential property

£0 – £125,000

0%

Less than £150,000

0%

£125,001 – £250,000

2%

£150,001 – £250,000

2%

£250,001 – £925,000

5%

Over £250,000

5%

£925,001 – £1.5m

10%

 

 

Over £1.5m

12%

 

 

First-time buyers pay nothing on the first £300,000 and then 5% on the next £200,000. If the property is over £500,000, the rates in the table above apply.

For purchases by companies and other non-natural persons in excess of £500,000 a rate of 15% applies, subject to certain exclusions.

Scotland – land and buildings transaction tax

On the transfer of residential property                   

On the transfer of non-residential property

£0 – £145,000

0%

£0 – £150,000

0%

£145,001 – £250,000

2%

£150,001 – £350,000   

3%

£250,001 – £325,000

5%

Over £350,000        

4.5%

£325,001 – £750,000

10%

 

 

Over £750,000

12%

 

 

First-time buyers pay nothing on the first £175,000 from 6 April 2018 (subject to consultation).

Wales from 1 April 2018 – proposed land transaction tax

On the transfer of residential property                   

On the transfer of non-residential property

£0 – £180,000

0%

£0 – £150,000

0%

£180,001 – £250,000

3.5%

£150,001–  £250,000   

1%

£250,001 – £400,000

5%

£250,001 – £1m        

5%

£400,001 – £750,000

7.5%

Over £1m

6%

£750,000 – £1.5m

10%

 

 

Over £1.5m

12%

 

 

IMPORTANT NOTICE

These rates and allowances are based on autumn announcements made by the UK and Northern Ireland, Scottish and Welsh governments and are for information only. They are subject to change before 6 April and are subject to confirmation by the various governments.

Rates apply to the UK and Northern Ireland unless indicated otherwise.

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