Tax tweaks for 2018 – how will your finances balance out?
With the new tax year upon us, it's the perfect time to take a look at any changes to personal and business allowances, and how they might affect your tax liability over the coming 12 months.
While this year's changes are not especially dramatic, they could make a noticeable difference to your income – for better or for worse.
We've outlined the latest figures below, and whether they're likely to be a win or a loss for your bottom line.
- Capital gains tax allowance increased from £11,300 to £11,700
- Personal allowance increased from £11,500 to £11,850
- Higher rate threshold increases from £45,000 to £46,350
- Business rates switch to the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI)
- Threshold for Class 4 National Insurance Contributions is going up from £8,165 to £8,424
- The small profits threshold where Class 2 National Insurance Contributions are not liable is going up from £6,025 to £6,205
- Tax-free dividend allowance cut from £5,000 to £2,000 a year
- In an unchanged measure, if you earn between £100,000 and £123,700, your personal allowance continues to decrease by £1 for every £2 you earn, until it reaches £0
- Increased rate for NICs Class 2 contributions for the self-employed from £2.85 per week to £2.95 per week
- The threshold at which Class 4 National Insurance Contributions fall to 2% from 9% increases from £45,000 to £46,350
As we mentioned in our blog
last month, the VAT registration threshold remains at £85,000, and VAT rates are also unchanged for 2018/19. However, the government is consulting on possible changes to the VAT system, and we're keeping our ear close to the ground on this issue.
Don't hesitate to get in touch if you would like more details on these allowances and thresholds, or to chat through any concerns you may have for the coming tax year.
You might also find our new Perrys TaxApp a useful time-saving tool when searching for the latest tax information. Available for Apple and Android devices, it's regularly updated to ensure that all information is reliable, accurate and available 24/7. Download for free today!