The 2018/19 tax year starts at the stroke of midnight between the 5th and 6th of April. While many individuals leave tax planning to the end of the tax year, you can look to maximise the benefits by using your personal tax allowances* and reliefs straight away. Please get in touch to take advantage of one or more of the following:
Income Tax (for non Scottish taxpayers)
- The tax free personal allowance has increased to £11,850 from £11,500
- Basic rate tax of 20% will be payable on income above the tax free allowance and up to the new higher rate threshold of £46,350 (which has increased from £45,000).
- Additional rate income tax remains the same at 45% on income above £150,000
Income Tax (for Scottish taxpayers)
- New income tax rates and bands apply for Scottish taxpayers.
- The tax free personal allowance has increased to £11,850 from £11,500.
- A new starter rate of income tax of 19% for income above £11,850 up to £13,850.
- Basic rate tax of 20% will be payable on income above £13,850 up to £24,000.
- A new intermediate rate of tax of 21% for income above £24,000 up to the new higher rate threshold of £43,430.
- A new higher rate tax of 41% for income above £43,430.
- Top rate income tax of 46% for income over £150,000.
- The Junior ISA allowance has risen to £4,260 from £4,128 for children under 18.
- The adult ISA allowance of £20,000 remains unchanged.
- If you are 16 or 17 this tax year (or have children of these ages), they can benefit from both the Junior ISA allowance and adult ISA allowance (cash only).
- The Personal Savings Allowance, which gives you tax-free savings interest, remains £1,000 for basic rate tax-payers. This reduces to £500 for higher rate tax payers and additional rate tax payers do not get any allowance.
- The State Pension has increased by 3%, which for the full allowance is an increase of £4.80 a week to £164.35
- Minimum pension contributions (paid by employers and employees) through auto-enrolment have risen to 5% (2% employer and 3% employee) from 2% (1% employer and 1% employee)
- The Lifetime Allowance for pension savings has increased to £1,030,000.
- The Annual Allowance stays the same at £40,000 (though this reduces for individuals with income over £150,000 or if you have already accessed your pension savings)
- The Residence Nil Rate Band has risen to £125,000 from £100,000.
- This can be added to the £325,000 Inheritance Tax allowance when a direct descendant inherits someone’s main house.
- The annual gifting allowance remains the same at £3,000 and if you did not use it in 2017/18, this can be carried over to this tax year.
- The tax-free Dividend Allowance has reduced to £2,000 from £5,000 (although dividends received by pension funds and ISAs remain tax-free).
- There is no change to the taxation of Venture Capital Trusts, so you can invest up to £200,000 and get up to 30% income tax relief.
- Similarly, the taxation of Enterprise Investment Schemes is unchanged, meaning you can invest up to £1 million and claim up to 30% income tax relief.
Capital Gains Tax
- The Capital Gains Tax allowance has increased to £11,700 from £11,300.
- Married couples and civil partners will continue to be able to combine their annual allowances.
- Landlords will only be able to offset 50% of their mortgage interest payments against their rental income (down from 75%).
- By 2020, there will only be a 20% tax credit saving from a landlord’s mortgage interest.
*This information is based on our current understanding of the rules for the 2018-19 tax year.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
The value of investments and any income from them can go down as well as up and you may not get back the original amount invested.
The Financial Conduct Authority does not regulate tax, trusts or commercial Buy to Let mortgages.