Following the delivery of the Autumn Budget yesterday, we have summarised the key announcements below:
The personal allowances for 2018/19 will be £11,850 (2017/18 £11,500).
There were no changes announced to Income Tax rates, but the 2018/19 tax bands were increased to:
- The 20% Basic rate band (7.5% for dividends) increased to £34,500 (2017/18 £33,500)
- The 40% Higher rate band (32.5% for dividends) has been set at £34,501 to £150,000 (2017/18 £33,501 to £150,000)
- The Additional rate of 45% (38.1% for dividends) continues to apply to income of more than £150,000.
However, as previously announced, the current £5,000 tax-free dividend allowance will be reducing to £2,000 from April 2018.
The Marriage Allowance has been extended to £1,185 from April 2018. This is the amount of unused personal tax allowance that can be transferred between spouses, or civil partners, if the person receiving the transfer is not a higher rate tax payer.
Stamp Duty Land Tax for certain first-time buyers
With immediate effect, first-time buyers will pay no stamp duty on homes costing no more than £300,000.
First-time buyers of homes worth between £300,000 and £500,000 will not pay stamp duty on the first £300,000. Normal rates of stamp duty will apply to any purchases in excess of £500,000.
National Living Wage (NLW) and National Minimum Wage (NMW) increases
From April 2018, the NLW will increase from the present £7.50 per hour to £7.83 per hour.
The National Minimum wage will also increase to:
- £7.38 per hour for 21 – 24 year olds
- £5.90 per hour for 18 – 20 year olds
- £4.20 per hour for 16 and 17 year olds
- £3.70 per hour for apprentices
Pension lifetime allowance increased
The lifetime allowance will increase to £1,030,000 from April 2018.
As expected, there was no change to the rate of Corporation Tax, remaining at 19%.
However, indexation allowance on corporate capital gains for disposals after 1 January 2018 will be frozen.
Despite much speculation, there will be no immediate change for IR35 for the private sector. The Government will consult on extending public sector IR35 rules (introduced in April 2017) to the private sector and will publish findings in 2018.
Despite rumours of a reduction in the VAT registration threshold, the Chancellor announced this would remain at £85,000 for at least the next two years.
From April 2018, business rates will rise by any increase in the Consumer Price Index (CPI) rather than the Retail Prices Index (RPI). The change has been brought forward two years. Historically, the RPI has tended to be higher than the CPI.
Rates revaluations will now be undertaken every 3 years rather than the present 5 years. This will start after the next rates revaluation due during 2022.
R & D expenditure credit increase
The Government will legislate to increase the rate of the R&D expenditure credit from 11% to 12%, to support business investment in R&D, with effect from 1 January 2018.
Diesel car supplement increase
The diesel car supplement is to be increased from 3% to 4% from 6 April 2018. This will increase the company car tax and car fuel benefit charge (for company cars provided with an element of private use). Additionally, people using electrical charging points at work will not be charged benefit in kind tax from 2018.