The Personal Allowance (the level at which people can earn before paying the 20% basic rate of tax) will increase from £11,500 to £11,850. The threshold at which higher rate tax (40%) is payable will increase from £45,000 to £46,350. These thresholds are due to increase further over the next few years to £12,500 and £50,000 respectively.
In Scotland, Income Tax was officially devolved to Holyrood on 30 November 2016 and the Scottish Executive’s new plans for income tax come into effect in the 2018/19 tax year. More details are here:-
Scottish Rates of Income Tax from April 2018
Capital Gains Tax
The Annual Exemption has increased from £11,300 to £11,700. There is no change to CGT rates, namely 10% for basic rate tax payers and 20% for higher rate tax payers with sellers of residential investment property continuing to pay an additional 8% surcharge.
There is no major change other than a planned increase in the Residence Nil Rate Band (RNRB) which was phased in from April 2017.
This band can be inherited by a surviving spouse or civil partner and is in addition to the £325,000 existing NRB. This means that from 2020 it could be possible for a couple to leave up to £1 million of assets to their children without paying Inheritance Tax.
Tax Year Standard NRB Residence Nil Rate Band Total NRB
2018/19 £325,000 £125,000 £450,000
2019/20 £325,000 £150,000 £475,000
2020/21 £325,000 £175,000 £500,000
Personal Pensions remain unchanged, but the minimum contributions to a qualifying Auto Enrolment Workplace Pension Scheme that both employees and employers make will increase in the 2018/19 tax year and again in the 2019/20 tax year.
Tax Year Employer Employee Total
Up to April 2018 1% 1% 2%
2018/19 2% 3% 3%
2019/20 3% 5% 8%
Tax Efficient Investments
The annual investment limit for Enterprise Investment Schemes (EIS) increases to from £1 million to £2 million provided that any amount above £1 million is invested in knowledge-intensive companies. EIS schemes can secure income tax relief at 30%, the relief can be carried back the previous year, and unlimited Capital Gains Tax deferral is available.