April 2nd 2018 8:24 pm

Written by Russell Floyd

home :: tax news :: personal tax

New 2018 Tax Year Starting This Friday

This Friday marks the start of the new 2018/2019 tax year. Here is a quick run-through of what changes will kick in and how they may affect you.

From Friday nearly all taxpayers will have a basic standard personal allowance of £11,850. This is £350 more than last year and saves a basic rate taxpayer £70 over last year. This also means that the standard tax code will be 1185L. Couples both earning below the higher rate threshold will be able to transfer up to ten percent of their allowance to the other partner.

Higher rate taxpayers have the entry threshold now at £46,350, this is £1,350 above last year and will save them £270 in tax on top of the £70 extra from the increased personal allowance, a total of £340.

Every year the threshold at which the old plan one student loans deduction kicks in is increased. This year the plan two student loan will get a major increase to its threshold. Plan one loan deductions will now be 9 percent over £18,330. This is £555 above last year, saving up to £50 over the year. Plan two loans will see a £4,000 jump in the threshold saving up to £30 per month or £360 over the year.

A plan two graduate on £22k this year will pay £191 less in total deductions compared to last year. £90 of that reduction is due to the change to the student loan deduction threshold.

For those with businesses, or the self employed who normally take dividends from their company, there is a sharp decrease in the tax-free dividend allowance. Last year it was £5,000, it is now £2,000. Additionally, the plan to remove Class 2 national insurance contributions (£2.95 per week) has been deferred for one year to April 2019. This applies to anyone with self employed earnings over £6,205.

Devolution of tax powers is making major changes to Scottish tax for the first time. Last year there was just the slightly adjusted higher rate threshold compared to the rest of the UK. From Friday there will now be five bands of tax for Scottish taxpayers ranging from 19% to 46%. Powers are being devolved to Wales from April 2019 for setting income tax rates so expect big changes there in a year.

The minimum wage was increased to £7.83 an hour for people age 25+ yesterday. People between 21 and 24 should be paid a minimum of £7.38, and those between 18 and 20 £5.90. Under 18's minimum wage is £4.20 an hour. First year apprentices or apprentices under 19 year's old should be paid a £3.70 hourly minimum.

The living wage for 2018 is set at £10.20 an hour in London and £8.75 everywhere else. This is adhered to by 3,000 employers across the UK.

The government launched their tax-free childcare account system last month to replace childcare vouchers. Parents are advised to sign up and regularly check their account to receive their 20 percent top-ups on contributions they make to the account (top-ups of up to £2,000 per child - increasing to £4,000 for disabled children). This is on top of 30 hours of free childcare, childcare tax credits and schemes under universal credit.

People looking to increase their income in 2018, or maybe adding an additional income source/a second job can use our tools to see what they will take home from the increased pay. A trading allowance is also available so if your turnover for eBay/online selling or renting rooms out is below £1,000 no income needs to be declared for tax purposes.

Read our end of 2017 tax year tips to make sure you have made the most of last year's tax allowances, reliefs and more.

All of our calculators are ready and updated for the new tax year. Here are the full rates and thresholds for 2018.

See more articles from April 2018

Keywords:

Topics
Election - 33 available Personal Tax - 268 available Uk Budget - 88 available Welfare - 6 available Autumn Statement - 23 available Fraud - 13 available Business Tax - 31 available General - 68 available Expenses - 9 available Spring Statement - 7 available Tax Return - 39 available Self Employed - 21 available Limited Company - 4 available Benefits - 1 available Company Cars - 3 available
Browse Archives:
November 2024 - 1 available October 2024 - 6 available September 2024 - 3 available August 2024 - 4 available July 2024 - 5 available June 2024 - 7 available May 2024 - 5 available April 2024 - 2 available March 2024 - 6 available February 2024 - 2 available January 2024 - 4 available December 2023 - 3 available November 2023 - 4 available October 2023 - 4 available September 2023 - 2 available August 2023 - 2 available July 2023 - 2 available June 2023 - 4 available May 2023 - 5 available April 2023 - 2 available March 2023 - 6 available February 2023 - 4 available January 2023 - 7 available December 2022 - 6 available November 2022 - 4 available October 2022 - 5 available September 2022 - 9 available August 2022 - 3 available July 2022 - 3 available June 2022 - 3 available May 2022 - 4 available April 2022 - 3 available March 2022 - 3 available February 2022 - 4 available January 2022 - 4 available December 2021 - 4 available November 2021 - 3 available October 2021 - 3 available September 2021 - 3 available August 2021 - 3 available July 2021 - 6 available June 2021 - 2 available May 2021 - 4 available April 2021 - 3 available March 2021 - 5 available February 2021 - 3 available January 2021 - 9 available December 2020 - 5 available November 2020 - 5 available October 2020 - 5 available September 2020 - 8 available August 2020 - 5 available July 2020 - 13 available June 2020 - 3 available May 2020 - 7 available April 2020 - 5 available March 2020 - 10 available February 2020 - 10 available January 2020 - 6 available December 2019 - 6 available November 2019 - 7 available October 2019 - 5 available September 2019 - 6 available August 2019 - 9 available July 2019 - 6 available June 2019 - 4 available May 2019 - 4 available April 2019 - 4 available March 2019 - 9 available February 2019 - 4 available January 2019 - 6 available December 2018 - 3 available November 2018 - 5 available October 2018 - 7 available September 2018 - 9 available August 2018 - 3 available July 2018 - 4 available June 2018 - 5 available May 2018 - 6 available April 2018 - 4 available March 2018 - 6 available February 2018 - 6 available January 2018 - 2 available December 2017 - 5 available November 2017 - 8 available October 2017 - 5 available September 2017 - 4 available August 2017 - 3 available July 2017 - 5 available June 2017 - 2 available May 2017 - 5 available April 2017 - 4 available March 2017 - 6 available February 2017 - 3 available January 2017 - 4 available December 2016 - 3 available November 2016 - 4 available October 2016 - 3 available September 2016 - 2 available August 2016 - 6 available July 2016 - 4 available June 2016 - 2 available May 2016 - 2 available April 2016 - 2 available March 2016 - 3 available February 2016 - 2 available January 2016 - 5 available December 2015 - 3 available November 2015 - 4 available October 2015 - 3 available September 2015 - 2 available August 2015 - 2 available July 2015 - 5 available June 2015 - 3 available May 2015 - 1 available April 2015 - 2 available March 2015 - 6 available February 2015 - 3 available January 2015 - 3 available December 2014 - 4 available November 2014 - 2 available October 2014 - 5 available September 2014 - 1 available August 2014 - 2 available July 2014 - 2 available June 2014 - 3 available May 2014 - 2 available April 2014 - 5 available March 2014 - 4 available February 2014 - 2 available January 2014 - 5 available December 2013 - 3 available November 2013 - 3 available October 2013 - 4 available September 2013 - 5 available August 2013 - 7 available June 2013 - 1 available April 2013 - 3 available March 2013 - 6 available February 2013 - 5 available January 2013 - 4 available December 2012 - 1 available March 2012 - 3 available January 2012 - 2 available

© 2008 - 2024 UKTaxCalculators.co.uk