2018/19 New Tax Year
The new tax year has recently commenced, bringing with it a host of new legislation.
The tax free personal allowance for individuals has risen from £11,500 to £11,850, with income between £11,850 and £46,350 being taxed at the basic rate of 20%, £46,350 to £150,000 will be taxed at the higher rate of 40%. If you are in the lucky position to earn over £150,000 you will be taxed at the additional rate of 45%.
For Self Employed individuals Class 2 National Insurance Contributions will be payable on any profits over £6,205, the amount payable is £2.95 a week or £153.40 a year. The threshold for Class 4 National Insurance Contributions starts at profits of £8,424 and will be payable at 9% up to £46,350, with any profits over this being liable to a rate of 2%.
The tax free dividend allowance has dropped from £5,000 to £2,000. The tax on any dividends over £2,000 will be taxed using the same rates as 2017/18 7.5% for basic rate tax payers, 32.5% for higher rate tax payers and 38.1% for additional rate.
The annual exemption amount in respect of Capital Gains Tax has increased to £11,700 with any gains over this amount being taxed at 18% on residential property and 10% on other assets initially, rising to 28% on residential property and 20% on other assets for higher rate tax payers.
The annual allowance for private pension contributions remains at £40,000, but this can be increased to up to £120,000 if this allowance in the previous 3 years is unused. The lifetime allowance for pension contributions has increased from £1,000,000 to £1,030,000.
If you need any more information regarding the new tax year or would like to know how these changes may affect you then please don’t hesitate to get in touch with us.