New 2018 Accounting Tax Rates in Gloucestershire

New HMRC 2018 Tax Rates in Gloucestershire by ESB Accountancy come into effect this month.

New HMRC 2018 Tax Rates in Gloucestershire by ESB Accountancy come into effect.

2018 Personal allowance tax rates

The personal allowance increases to £11,850 for the 2018/19 tax year. As for 2017/18, the personal allowance is reduced by £1 for every £2 by which adjusted net income exceeds £100,000. This means that anyone with income in excess of £123,700 in 2018/19 will not receive a personal allowance.

2018 Income tax rates and thresholds

The basic rate band is increased to £34,500 for 2018/19, raising the rate at which higher rate tax becomes payable to £46,350. As for 2017/18, the additional rate threshold remains at £150,000.

The rates of income tax in the UK (excluding Scotland) are unchanged for 2018/19, with the basic rate remaining at 20%, the higher rate at 40% and the additional rate at 45%.

2018 Dividend tax rates

The dividend tax rates for 2018/19 remain at 7.5% to the extent that dividend income falls in the basic rate band, at 32.5% to the extent that dividend income falls in the higher rate band, and at 38.1% to the extent that dividend income falls in the additional rate band. However, the dividend allowance – the band within which dividends are taxed at a zero rate – falls from £5,000 to £2,000 from 6 April 2018.

The dividend allowance was reduced from £5,000 to £2,000 with effect from 6 April 2018.

The dividend allowance is effectively a zero-rate band and dividends that are covered by the allowance are received free of tax. All individuals are entitled to a dividend allowance, regardless of whether they pay tax at the basic, higher or additional rate.

Many personal and family companies extract profits in the form of dividends once a small salary has been taken. Where possible, it is advantageous to ensure that the dividend allowance for 2017/18 is not wasted and, if necessary, declare and pay a dividend prior to 6 April 2018 in order to mop up any unused dividend allowance.

Assuming dividends of at least £5,000 are taken each tax year, the reduction in the dividend allowance from £5,000 to £2,000 will increase the tax paid on dividends by a basic rate taxpayer by £225, that payable by a higher rate taxpayer by £975 and the dividend tax payable by an additional rate taxpayer by £1,143.

2018 Capital Gains Tax Rates

The exempt amount for capital gains tax purposes is increased to £11,700 for 2018/19. The rates of capital gains tax remain at 10% to the extent that total taxable income and gains does not exceed the basic rate limit and at 20% where income and gains are more than the basic rate limit. Higher rates of, respectively, 18% and 28%, apply to gains on residential property.

2018 Corporation tax

The rate of corporation tax for the financial year 2018 (the year starting on 1 April 2018) remains at 19%.

VAT threshold

The VAT threshold is frozen at its current level of £85,000 for two years from 1 April 2018. The VAT de-registration threshold remains at £83,000.

2018 National Insurance contributions

For 2018/19 the lower earnings limit for Class 1 National Insurance purposes is increased to £116 per week, the primary and secondary thresholds are increased to £162 per week and the upper earnings limit is increased to £892 per week. The upper secondary threshold for under 21s and the apprentice upper secondary threshold, both aligned with the upper earnings limit, increase to £892 per week for 2018/19.

The main primary rate of Class 1 contributions remains at 12%, the additional rate remains at 2% and the secondary rate remains at 13.8%.

The National Insurance employment allowance remains at £3,000 for 2018/19.

The Class 2 small profits limit rises to £6,205 for 2018/19 and the weekly rate of Class 2 contributions increases to £2.95 per week.

The rate of voluntary Class 3 contributions increases to £14.65 per week for 2018/19.

The lower profits limit for Class 4 contributions increases to £8,424 for 2018/19 and the upper profits limit increases to £46,350. The main rate of Class 4 contributions remains at 9% and the additional rate remains at 2%.

Please talk to us at ESB Accountancy to discuss making the most of your tax rates – with several decades of financial experience here in Gloucestershire you can either ring us now on  – email us on or click the Contact Us buttonpayroll bookkeeping services small business help contact esb accountancy gloucestershire cheltenhamor please fill the form at the bottom of the contact us page.

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