As the beginning of the 2018/19 tax year approaches, some significant changes to business and tax legislation are set to take effect. Here, we take a look at some of the key measures that could affect your business or personal finances.
Increase in employers’ minimum auto-enrolment contributions
Currently the pension auto-enrolment legislation requires employers to contribute at least 1% on qualifying earnings. From 6 April 2018, employers may be required to increase the contribution they pay into their automatic enrolment workplace pension scheme. Affected employers will be required to pay a minimum of 2% from this time, with a further increase to 3% set to take place from 6 April 2019.
Reduction in the Dividend Allowance
The Dividend Allowance is set to reduce to £2,000 on 6 April 2018, from its current level of £5,000. The stated aim is to ‘address the unfairness associated with director-shareholders’ tax advantage’.
Rising National Living Wage (NLW) and National Minimum Wage (NMW) rates
From 1 April 2018, the NLW for employees aged 25 and over will increase to £7.83 per hour.
Meanwhile, the NMW will increase to £7.38 per hour for workers aged 21-24, and to £5.90 an hour for workers aged 18-20. For workers who are aged 16-17, the NMW will rise to £4.20 per hour, and for apprentices, the rate will rise to £3.70 an hour. An apprentice is an individual who is aged under 19, or 19 and over and in the first year of their apprenticeship.
Introduction of the new Welsh Land Transaction Tax (LTT)
1 April sees the introduction of the new LTT, which preserves the essential structure of Stamp Duty Land Tax (SDLT), but with some key differences, including a higher starting threshold for residential properties. For those seeking to purchase a residential property in Wales, there will be no tax to pay on a home worth up to £180,000.
The new Scottish income tax bands
From 6 April 2018, a raft of additional changes will take effect for taxpayers who are resident in Scotland. In the 2017 Scottish Budget, the Finance Secretary for Scotland, Derek Mackay, announced two new income tax bands, bringing the possible income tax rates payable up to five. The new Scottish income tax rates range from 19% to 46%.
Rise in the pensions Lifetime Allowance (LTA)
The LTA has increased in line with the Consumer Price Index (CPI), and for 2018/19 it will rise from £1,000,000 to £1,030,000.
For more information on the key changes set to take effect from April 2018, please visit the Hot Topics section of our website.