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The New Tax Year: What Do We Have To Know?

06/04/2018 09:18 pm

The new tax year, which started on the 6th of April, has brought some important changes. Even though they are not as dramatic as those of the previous year, everyone who cares about their finances should become acquainted with them.

In this article Right Accounts gives you a summary of the most important changes that you should be aware of.

Main changes

  • The Personal Allowance (untaxed earnings) increased from £11,500 to £11,850.
  • The threshold for the 40% higher-rate of income tax increased from £45,000 to £46,350.
  • The Dividend Allowance was reduced from £5,000 to £2,000. This news will mostly have a negative effect on freelancers, contractors and small businesses working via a limited company. It is calculated that basic rate tax payers will have to pay an additional £225 of income tax on the dividends paid by the company.
  • The Capital Gains Tax annual exempt amount increased in line with the Consumer Price Index from £11,300 to £11,700 (for individuals)
  • The Research and Development expenditure credit increaased from 11% to 12%.

National Minimum and National Living Wage

The National Minimum Wage is the minimum pay per hour almost all workers are entitled to by law. Use the National Minimum Wage calculator to check if you’re paying a worker the National Minimum Wage or if you owe them payments from past years.

  • 25 years and over - £7.83 (increased from £7.50
  • 21 to 24 years - £7.38 (increased from £7.05)
  • 18 to 20 years - £5.90 (increased from £5.60)
  • Under 18 years - £4.20 (increased from £4.05)
  • Apprentice - £3.70 (increased from £3.50)

Taxes on cars

  • The diesel supplement, which is used to calculate company car tax and car fuel benefit charge paid on company cars increased from 3% to 4%.
  • The Benefit in kind (BIK) on company vans increased from £3,230 to £3,350
  • The BiK on fuel for a van provided for personal use increased from £610 to £633
  • The percentage applied to the list price of the car increased as followed:
    • When CO2 emission range is from 0 to 50 - 13% (increased from 9%)
    • When CO2 emission range is from 51 to 75 – 16% (increased from 13%)
    • When CO2 emission range is from 76 to 94 – 19% (increased from 17%)

Rates and thresholds

HMRC has also announced new Tax thresholds, rates and codes. The new rates can be found here.