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Five personal tax changes for 2018-19

The start of the new tax year has brought the usual round of changes that are likely to affect your personal finances. These may be summarised as follows:

1. Income Tax

The Personal Allowance has been raised to £11,850 across the UK. The Higher Rate threshold has been increased to £46,350 for England, Wales and Northern Ireland.

Scotland has introduced two new tax bands: a Starter Rate from £11,850 to £13,850 and an Intermediate Rate from £24,000 to £43,430. The Higher Rate applies to those earning above £43,430.

2. Dividends Allowance

The tax-free Dividend Allowance has been reduced from £5,000 to £2,000. This means that, if you are used to taking income in the form of dividends, you are likely to see a significant rise in the amount of tax you pay.

Beyond this, if you are a Standard Rate taxpayer you will pay tax on dividends of 7.5%; a Higher Rate taxpayer will pay 32.5%; the Additional Rate is 38.1%.

3. Residence nil-rate band

The Inheritance Tax (IHT) threshold remains unchanged at £325,000 (£650,000 per couple), but the Residence nil-rate band, which allows people to pass on the family home to direct descendants, has been raised from £100,000 to £125,000 leading to a potential saving on death duties. The Residence nil-rate allowance can be added to the basic IHT threshold under qualifying conditions.

4. Devolved property taxes

A number of changes have been introduced that could mean you pay different taxes depending on which part of the UK you live in. For example, first-time buyers in Scotland will pay nothing on the first £175,000 from June 2018 (subject to consultation).

In Wales, with effect from April this year, Land Transaction Tax will replace Stamp Duty with a threshold of £180,000 for all home buyers.

For England and Northern Ireland, Stamp Duty rates remain unchanged, with first-time buyers exempted from property taxes on homes worth less than £300,000.

5. Junior ISA limit

Those saving for their child through a Junior ISA may benefit from the slight increase in limit from £4,128 to £4,260 per annum. The annual allowance for adult ISAs remains unchanged at £20,000.

Get in touch

We can help with personal tax planning. Give us a call today on 01483 205890

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