Following last month’s budget it is, for most people, a case of no change despite several rumours circulating in the previous weeks. The main contents with regard to Income Tax were as follows:
Tax Rates
Income Tax rates are unchanged for 2018/19 as follows:
Basic Rate 20%
Higher Rate 40%
Additional Rate 45%
Similarly, the rate of tax on dividends is unchanged as follows:
Dividend Ordinary Rate 7.5%
Dividend Upper Rate 32.5%
Dividend Additional Rate 38.1%
Tax Allowances and Bands
There are some movements, including one that will decrease, in the tax allowances and the tax bands which are subjected to the above rates. For 2018/19 the allowances and tax bands are as follows:
Personal Allowance £11,850 (previously £11,500)
Basic Rate Limit £34,500 (previously £33,500)
Higher Rate Limit £150,000 (unchanged)
Tax Free Dividend Allowance £2,000 (previously £5,000)
Tax Free Savings Allowance £1,000 (unchanged)
As at present, the Personal Allowance will decrease by £1 for every £2 by which net relevant earnings, basically earnings before deducting the personal allowance, exceeds £100,000.
Savings Allowaces
The majority of incentives available for savings remain unchanged. The two affecting most people are:
- ISA’s Subscription limit unchanged at £20,000
- Pensions The Lifetime Allowance increases to £1,030,000 from £1m