What tax changes are on the horizon?

5th March 2018

It feels like yesterday when chancellor Philip Hammond delivered his first Autumn Budget back in November 2017, yet here we are less than month away from the start of a new tax year. 

Most of these changes come into force on 6 April 2018, so being aware of what’s around the corner may save you tax in the months ahead. 

What can I expect from the 2018/19 tax changes?

Here’s what we can expect for 2018/19, although there’s an extremely slim chance Hammond may announce new measures when he delivers his Spring Statement on 13 March 2018.

Income tax

The personal allowance will increase to £11,850 around the UK, while the higher rate threshold will rise to £46,350. 

Dividends

The dividend allowance is to reduce from £5,000 to £2,000 from 6 April 2018. 

Corporation tax

The corporation tax rate around the UK will remain at 19% from 1 April 2018.

Enterprise investment scheme

From 6 April 2018, it will be possible to invest up to £2 million in knowledge-intensive companies under the enterprise investment scheme. 

A knowledge-intensive company is classed as a smaller, innovative business carrying out R&D and other activities to develop intellectual property for its own purposes. 

Will the VAT system change?

The current VAT thresholds remain unchanged until 31 March 2020.

Therefore, a business must be VAT-registered when their taxable turnover in the last 12 months exceeds £85,000 or is expected to exceed £85,000 in the next 30 days.

An individual can apply to deregister for VAT if taxable turnover drops below £83,000 in the last 12 months. 

Capital gains

For 2018/19, the capital gains tax allowance will rise to £11,700. 

Inheritance tax - residence nil-rate band to increase

The inheritance tax (IHT) threshold (£325,000) and various rates remain unchanged for 2018/19. However, the residence nil-rate band is poised to increase to £125,000 from 6 April 2018. 

This can be added to the basic IHT threshold (giving a combined total of £450,000) if the person and their estate meet the qualifying conditions – and can be doubled for married couples. 

ISAs 

The annual ISA limit stays at £20,000 for the next financial year, although the junior ISA threshold will increase to £4,260 from 6 April 2018. 

National minimum and living wage

For those aged 25 and over, the national living wage will be increased from £7.50 to £7.83 per hour for 2018/19.

The national minimum wage rates will also increase as follows:

  • apprentices: £3.70 per hour
  • 16 and 17-year-olds: £4.20 per hour
  • 18 to 20-year-olds: £5.90 per hour
  • 21 to 24-year-olds: £7.38 per hour.

How can we help?

Our team of experts can help you make the most of the various allowances and reliefs available in 2018/19. 

Get in touch on enquiries@hollingdalepooley.co.uk or call 0117 973 3377 for more information.