As the 2018/19 tax year commences, a handful of new business and tax measures have come into effect, some of which are outlined below.
From 6 April, the tax-free Dividend Allowance has been reduced to £2,000 from £5,000. The change has been made in order to ‘address the unfairness associated with director-shareholders’ tax advantage’.
Meanwhile, from 6 April employers may need to increase the contributions they pay into their automatic enrolment workplace pension scheme. Some employers are now required to contribute a minimum of 2% on qualifying earnings, which has increased from the previous figure of 1%. A further increase to 3% is set to take effect from 6 April 2019.
Increases to the basic and higher rate income tax bands for England, Wales and Northern Ireland take effect from today, whilst the personal allowance has risen from £11,500 to £11,850. Scottish taxpayers are entitled to the same personal allowance as the rest of the UK.
From today, tax on income is different for taxpayers resident in Scotland. In the 2018/19 Scottish Draft Budget, Derek Mackay, Finance Secretary for Scotland, announced two new income tax bands, bringing the possible income tax rates payable up to five.
A new starter rate of 19% for the first £2,000 of income above the personal allowance was announced, alongside an intermediate rate of 21% for income between £24,000 and the higher rate threshold. The higher and top rates of tax have also increased to 41% and 46%.
Finally, the lifetime allowance (LTA) has increased in line with the Consumer Price Index (CPI) from today. The LTA is the maximum amount an individual can save into their pension scheme and still receive tax relief. For 2018/19, it has risen to £1,030,000 from £1,000,000.
For more information on the measures taking effect from today and how they may affect you, please contact us.