Tax and finance changes for 2018
With Christmas done and dusted for another year and many of us returning to work this week, there's no better time to get clued up on the major tax and finance changes for 2018.
Most of these changes won't come into force until the start of the next financial year - on 6th April 2018 - but being aware of what's around the corner may save you tax in the coming months.
Some measures are waiting to receive Royal Assent, so here's what we know so far.
Income tax
The personal allowance will increase to £11,850 around the UK, while the higher rate threshold will rise to £46,350 in England, Wales and Northern Ireland.
For taxpayers in Scotland, there will be 5 income tax bands and rates for the first time.
The higher rate threshold in Scotland will rise to £44,274 - and 2 new income tax bands will also be in play. Assuming individuals are in receipt of the personal allowance, these are:
The starter rate: £11,851 to £13,850
The intermediary rate: £24,001 to £44,273.
Property taxes
Since 22nd November 2017, first-time buyers in England and Northern Ireland have been able to get on the property ladder without paying stamp duty on properties worth up to £300,000.
In response to that measure announced in Autumn Budget 2017, Wales announced it will raise its land transaction tax rate from £150,000 to £180,000 for all home buyers - but not until 1st April 2018.
And from 6th April 2018, first-time buyers in Scotland will be able to buy a property worth up to £175,000 without being liable for land and buildings transaction tax.
Corporation tax
The corporation tax rate around the UK will remain at 19% from 1st 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.
VAT
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 de-register for VAT if taxable turnover drops below £83,000 in the last 12 months.
Capital gains
If your company makes a capital gain on or after 1st January 2018, the indexation allowance that determines the chargeable gain will be calculated up to December 2017.
For 2018/19, the capital gains tax allowance will rise to £11,700.
Inheritance tax
The inheritance tax (IHT) threshold (£325,000) and various rates remain unchanged for 2018/19. However, the residence nil-rate band increases to £125,000 from 6th 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 6th April 2018.
With Christmas done and dusted for another year and many of us returning to work this week, there's no better time to get clued up on the major tax and finance changes for 2018.
Most of these changes won't come into force until the start of the next financial year - on 6th April 2018 - but being aware of what's around the corner may save you tax in the coming months.
Some measures are waiting to receive Royal Assent, so here's what we know so far.
Income tax
The personal allowance will increase to £11,850 around the UK, while the higher rate threshold will rise to £46,350 in England, Wales and Northern Ireland.
For taxpayers in Scotland, there will be 5 income tax bands and rates for the first time.
The higher rate threshold in Scotland will rise to £44,274 - and 2 new income tax bands will also be in play. Assuming individuals are in receipt of the personal allowance, these are:
The starter rate: £11,851 to £13,850
The intermediary rate: £24,001 to £44,273.
Property taxes
Since 22nd November 2017, first-time buyers in England and Northern Ireland have been able to get on the property ladder without paying stamp duty on properties worth up to £300,000.
In response to that measure announced in Autumn Budget 2017, Wales announced it will raise its land transaction tax rate from £150,000 to £180,000 for all home buyers - but not until 1st April 2018.
And from 6th April 2018, first-time buyers in Scotland will be able to buy a property worth up to £175,000 without being liable for land and buildings transaction tax.
Corporation tax
The corporation tax rate around the UK will remain at 19% from 1st 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.
VAT
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 de-register for VAT if taxable turnover drops below £83,000 in the last 12 months.
Capital gains
If your company makes a capital gain on or after 1st January 2018, the indexation allowance that determines the chargeable gain will be calculated up to December 2017.
For 2018/19, the capital gains tax allowance will rise to £11,700.
Inheritance tax
The inheritance tax (IHT) threshold (£325,000) and various rates remain unchanged for 2018/19. However, the residence nil-rate band increases to £125,000 from 6th 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 6th April 2018.
We can help you plan your finances and help minimise
your tax liabilities. Contact us on 0113 202 9529, or e-mail bfm@pipllp.co.uk
