Wessex investment Management

LinkedIn Mail RSS
T: 0800 652 8455

E: advice@wessexim.co.uk

Taxation and Allowances Guide 2018/19

Income tax

Bands – main rates (a)

2017/18

2017/18

2018/19

2017/18

£1-34,500

(£1-£33,500)

20%

(20%)

£33,501-£150,000

(£33,501-£150,000)

40%

(40%)

Over £150,000

(over £150,000)

45%

(45%)

The first £2,000 (£5,000) of dividends is taxed at 0% (0%), and this amount is taken into account in determining the income tax band. Dividends above £2,000 (£5,000) are taxed at 7.5% (7.5%), 32.5% (32.5%) or 38.1% (38.1%) as the top slice of total income.
The personal savings allowance exempts interest income of £1,000 (£1,000) for basic rate taxpayers (20%) and £500 (£500) for higher rate taxpayers (40%). The allowance does not apply to additional rate taxpayers (45%). In addition to the personal savings allowance, other non-dividend savings income (typically bank and building society interest) is taxed at 0% (0%) up to £5,000 (£5,000). This 0% rate is not available if income from other sources, including dividends, exceeds £5,000 (£5,000).
There are special rules for trusts, and also for individuals with income assessable on the remittance basis. An additional tax charge applies to clawback child bene t where one income in a household exceeds £50,000, with full clawback by £60,000.
(a) For income tax in Scotland, on the 14 December the Scottish Government published the following proposals for income tax rates and bands in 2018/19 in the Draft Scottish Budget: Over £11,850*- £13,850 (Starter Rate) 19%; Over £13,850-£24,000 (Basic Rate) 20%; Over £24,000-£44,273 (Intermediate Rate) 21%; Over £44,273-£150,000** (Higher Rate) 41%; Above £150,000** (Top Rate) 46% - * Assumes person is in receipt of the Standard UK Personal Allowance - ** Personal Allowance is reduced by £1 for every £2 earned over £100,000.

Personal allowances

 

2018/19

2017/18

Personal allowance (a)

£11,850

(£11,500)

Income limit for personal allowance (b)

£100,000

(£100,000)

Blind person’s allowance

£2,390

(£2,320)

Married couple’s allowance (b) (c)

£8,695

(£8,445)

Marriage allowance (d)

£1,185

(£1,150)

Trading income allowance (e) (f)

£1,000

£1,000

Property income allowance (f)

£1,000

£1,000

(a)  The personal allowance applies to all individuals.
(b)  The personal allowance is reduced by £1 for each £2 by which income exceeds £100,000, irrespective of age or date of birth.
(c)  Relief is limited to 10%, and extends to civil partnerships. At least one spouse/partner must have been born before 6 April 1935. The allowance is reduced where income exceeds £28,900 (£28,000), subject to an absolute minimum of £3,360 (£3,260).
(d)  A non taxpayer can transfer up to £1,185 (£1,150) of the personal allowance to a spouse or civil partner who is a basic rate taxpayer. Relief is given at 20%.
(e)  The trading income allowance applies to certain miscellaneous income from providing assets or services in the course of a trade.
(f) Trading or property income (before expenses) within these allowances is exempt. Individuals with gross trading or property income above the allowance can choose between deducting £1,000 or actual allowable expenditure.

Company cars – annual benefits

The annual benefit is a percentage of list price, with the percentage dependent on the level of CO2 emissions. The benefit is 13% (9%) for emissions of 0-50g/km, and 16% (13%) for 51-75g/km. For emissions of 76-94g/km, the rate is 19% (17%) and increases by 1% at 95g/km, and then for each additional full 5g/km up to a maximum charge of 37% for emissions of 180g/km (190g/km) or more. Emission levels are rounded down to the nearest multiple of five. List price includes certain accessories, but is reduced for capital contributions of up to £5,000. There is a diesel supplement of 4% (3%), subject to the maximum charge of 37%. The taxable benefit for significant private use of vans is £3,350 (£3,230).
Where fuel is provided for private use in a company car, the taxable bene t percentage is applied to £23,400 (£22,600). The benefit for fuel provided for a van with significant private use is £633 (£610).

Cap on income tax reliefs

Certain income tax reliefs are capped at the greater of £50,000 or 25% of income. This excludes charitable donations.

Pensions

 

2018/19

2017/18

Lifetime allowance (a)

£1,030,000

(£1,000,000)

Equivalent to defined benefit pension

£51,500

(£50,000)

Maximum contribution annual allowance (b)

£40,000

(£40,000)

Tax on excess

Marginal rate

(Marginal rate)

Normal minimum pension age

55

(55)

(a)  Special rules apply to individuals with benefits exceeding the lifetime allowance, or any previous protected amount. Excess over this amount may be subject to a 25% charge plus income tax on balances drawn, or 55% for lump sum benefits.
(b)  There is a reduction in the annual allowance by £1 for every £2 of adjusted income in excess of £150,000, up to a limit of £210,000.

An income tax exemption and NICs disregard covers the first £500 worth of pension advice provided to an employee in a tax year.

Tax efficient investments

 

2018/19

2017/18

ISA limit (a)

£20,000

£20,000

Junior ISA limit (b)

£4,260

£4,128

(a) Investment can be in cash or shares, and peer to peer lending platforms.
(b) Investment can only be in cash or shares.
Help to Buy ISA: for rst time buyers. Maximum deposits of £200 per month, plus an initial deposit of up to £1,000.
Venture Capital Trusts (VCTs): income tax relief at up to 30% on investment up to £200,000, with capital gains tax reliefs.
Enterprise Investment Scheme (EIS): income tax relief at up to 30% on qualifying share subscriptions up to £1m (£2m if the excess over £1m is invested in knowledge-intensive companies), with capital gains tax reliefs. Seed
Enterprise Investment Scheme (SEIS): income tax relief of 50% on qualifying share subscriptions up to £100,000, with capital gains tax reliefs.
Social Investment Tax Relief (SITR): income tax relief of 30% on investment up to £1m (£1m) with capital gains tax reliefs.
Lifetime ISAs: available to adults under the age of 40, who can contribute up to £4,000 per year. Contributions made before the age of 50 qualify for a 25% bonus from the Government. Funds from Lifetime ISAs can be used to buy a rst home at any time from 12 months after the account opening, or can be withdrawn from age 60.

Non domiciled remittance basic users

 

2018/19

2017/18

Personal allowance

Nil

Nil

Capital gains tax annual exemption

Nil

Nil

Capital gains tax rate

20%

20%

Note: Gains on carried interest and chargeable residential property - 8% surcharge

Remittance basis charge

Unremitted income less than £2,000

Nil

Nil

Resident in at least 7 of the previous 9 tax years

£30,000

£30,000

Resident in at least 12 of the previous 14 tax years

£60,000

£60,000

Note: From 6 April 2017, certain returning former UK domiciled individuals, and non-domiciled individuals who have been resident in the UK in at least 15 of the previous 20 tax years, will be treated as if UK domicilied for income tax, capital gains tax and inheritance tax purposes.

Inheritance tax

 

2018/19

2017/18

Up to £325,000 (£325,000) (“nil rate band”)

0%

0%

Over £325,000 (£325,000) (frozen to 2020/21)

40%

40%

An additional nil rate band of £125,000 (£100,000) is available when a main residence is passed on death to a direct descendant. If the net value of the estate exceeds £2m, this additional nil rate band will be reduced by £1 for each £2 by which the net value exceeds that amount.
A surviving spouse or civil partner may claim the unused proportion of an earlier deceased spouse’s, or civil partner’s, nil rate band and additional nil rate band, up to the current nil rate band/additional nil rate band.
A reduced rate of 36% (36%) applies when 10% or more of a net estate is left to charity.
Reduced charges apply on lifetime gifts within seven years of death.

Capital gains tax

 

2018/19

2017/18

Basic rate taxpayers (a)

10%

(10%)

Trustees and 40%/45% (40%/45%) taxpayers (a)

20%

(20%)

Annual exempt amount – individuals

£11,700

(£11,300)

Annual exempt amount – trusts

£5,850

(£5,650)

Entrepreneurs’ relief lifetime limit

£10m

(£10m)

Entrepreneurs’ relief rate

10%

(10%)

(a) Gains on residential properties not qualifying for principal private residence relief, and on carried interest, are taxed at 18% and 28% respectively.


National insurance contributions

Class 1 employees

Weekly earnings

Up to £162 (£157)

Nil (Nil)

£162.01-£892 (£157.01-£866)

12% (12%)

Over £892 (over £866)

2% (2%)

Class 1 employees (a) (b)

Weekly earnings

Up to £162 (£157)

Nil (Nil)

Over £162 (Over £157)

13.8% (13.8%)

(a) Most businesses and charities can claim a reduction of up to £3,000 (£3,000) of their employers’ contributions (“NIC employment allowance”).
(b) No employers’ contributions are payable in respect of weekly earnings up to £892 (£866) paid to employees under 21 and apprentices under 25.

Other

Class 1A (employers only): 13.8% (13.8%) on the amounts of taxable benefits.
Class 1B (employers only): 13.8% (13.8%) in respect of amounts in a PAYE settlement agreement and the income tax thereon.
Class 2 (flat rate for self-employed): £2.95 (£2.85) per week on profits above £6,205 (£6,025).
Class 3 (voluntary): £14.65 (£14.25) per week.
Class 4 (self-employed): 9% (9%) of profits between £8,424 (£8,164) and £46,350 (£45,000) per annum and 2% (2%) on profits above £46,350 (£45,000).


Apprenticeship levy

From 1 April 2017, a 0.5% annual levy will be payable by employers, charged on payroll costs in excess of £3,000,000.

Corporation Tax

Financial year (from 1 April)

2018

2017

Main rate

19%

(19%)

Surcharge on bank profits

8%

(8%)

Loss annual allowance per group

£5 million

£5 million

Restriction of losses (% of profits above allowance)

50%

50%

Diverted profits tax

Companies with diverted profits pay diverted profits tax at 25% on such profits.

Capital allowances

Expenditure on:

2018/19

2017/18

Plant and machinery (a)

18%

(18%)

Plant and machinery in certain enterprise zones

100%

(100%)

Motor cars – CO2 emissions;

≤75g/km (≤75g/km) (a)

100%

(100%)

75-130g/km (75-130g/km) (a)

18%

(18%)

>130g/km (>130g/km) (a)

8%

(8%)

New and unused zero emission goods vehicles

100%

(100%)

Long life assets/integral features in buildings (a)

8%

(8%)

Patent rights and know-how (a) (b)

25%

(25%)

Mines, oil wells, mineral rights (a) (c)

25%

(25%)

Research and development

100%

(100%)

Energy-saving and water efficient plant and machinery

100%

(100%)

A 100% annual investment allowance is given on the first £200,000 per annum of capital expenditure incurred on or after 1 January 2016 per group of companies or related entities, on plant and machinery including long life assets and integral features, but excluding cars.

(a) These allowances are given on a reducing balance basis.
(b) Tax relief for expenditure on certain intangibles is given by accounting write downs
(and not capital allowances).
(c) Acquisition of mineral deposits and rights qualify for 10% p.a.

Patent box and research & development tax credits

Financial year (from 1 April)

2018

2017

Patent box – effective corporation tax rate

10%

11%

R&D tax credit for SMEs

130%

130%

R&D expenditure credit – minimum rate

11%

11% (a)


(a) 12% from 1 January 2018.


Value added tax

Registration threshold: taxable supplies at the end of any month exceed £85,000 (£85,000) either in the past 12 months or the next 30 days.

Standard rate

20%

Lower rate

5%

Zero rate

0%


Insurance premium tax

Standard rate

12%

Higher rate

20%

Annual tax on enveloped dwellings

An annual tax on enveloped dwellings is payable by a company (or similar entity) owning a residential property with a value more than £500,000 (£500,000) on 1 April 2017 (or date of acquisition, if later). Tax is charged in bands, from a minimum of £3,600 (£3,500) to a maximum of £226,950 (£220,350).


Stamp duties and property transaction taxes

England and Wales: Stamp duty land tax (a)

Non-residential land and buildings - rates applied cumulatively

 

2018/19

2017/18

£0-£150,000

0%

(0%)

£150,001-£250,000

2%

(2%)

Over £250,000

5%

5%


Residential land and buildings (c)(d) - rates applied cumulatively

 

2018/19

2017/18

£0-£125,000

0%

(0%)

£125,001-£250,000

2%

(2%)

£250,001-£925,000

5%

(5%)

£925,001-£1,500,000

10%

(10%)

Over £1,500,000

12%

(12%)

(a)  All gures are calculated inclusive of any VAT. For leases, the rate is based on the discounted rental values.
(b)  Where residential property over £500,000 is purchased by a company (or similar entity) a 15% rate applies.
(c)  A 3% surcharge applies to all second and additional residential properties on transactions of £40,000 or more
(d) From 22 November 2017 first time buyers paying £300,000 or less for a residential property will pay no stamp duty land tax. For purchases between £300,000 and £500,000 stamp duty land tax will be payable at 5% on the excess over £300,000.

Scotland: Land & buildings transaction tax

Land and buildings transaction tax applies in Scotland instead of stamp duty land tax, with different rates and bands.


Wales: Land transaction tax

From 1 April 2018 land transaction tax will replace stamp duty land tax in Wales, with different rates and bands.


Other stamp duty 2018/19

Stamp duty – shares and securities

0.5%

Stamp duty reserve tax

0.5%/1.5%

Stamp duty, and stamp duty reserve tax, is not charged on recognised growth markets, including AIM and ISDX.


Air passenger duty

Rates per passenger from 1 April 2017 (a) (b)

Lowest class of travel

Other classes of travel

Higher rate (c)

Band A (0-2,000 miles from London)

£13 (£13)

£26 (£26)

£78 (£78)

Band B (over 2,000 miles from London)

£75 (£73)

£150 (£146)

£450 (£438)

(a) Flights from airports in the Scottish Highlands and Islands, and long haul flights from airports in Northern Ireland are exempt.
(b) Air passenger duty is not charged for the lowest class of travel for children aged 16 and under at time of flight.
(c) Aircraft over 20 tonnes and seating fewer than 19 passengers.


Head Office

The Wincombe Centre,
Wincombe Business Park,
Shaftesbury, SP7 9QJ

Tel: 01747 859 411
Fax: 0870 460 1279
Email: advice@wessexim.co.uk

LinkedIn Mail RSS

Our Digital Magazine

To download our complimentary financial magazine simply register your name and email address below.


Financial News

Latest Tweets

Independent

adjective

"Free from outside control or influence"
"Not depending on another for livelihood or subsistence"

noun

"An independent person or body"

Unbiased

adjective

"Showing no prejudice for or against something"

Impartial

adjective

"Treating all equally"

Professional

adjective

"Relating to or belonging to a profession" & "Engaged in specified activity as one's main paid occupation rather than as an amateur"

noun

"A person engaged or qualified in a profession"

Knowledgeable

adjective

"Intelligent and well informed"

Principled

adjective

"Acting in accordance with morality" & "A coherent and principled approach"

Trust

noun

"Firm belief in the reliability, truth, or ability of someone or something"

Advice

noun

"Guidance or recommendations offered with regard to prudent action"

Planning

noun

"The process of making plans for something"