It’s that time of year again. April marks the start of the new tax year, which means a number of changes that will impact your finances. Here’s what you need to know:
The point at which workers start paying tax has risen from £11,500 to £11,850. The level at which workers start paying higher rate tax (40%) has also increased from £45,000 to £46,350.
The amount of dividends investors can receive tax-free has fallen from £5,000 to £2,000.
Currently you can pass on £325,000 to a descendant tax-free. This figure is frozen for 2018/19. However, if the estate includes the home, individuals can get an extra allowance under the ‘residence nil-rate’, which has just increased to £125,000 from £100,000.
Nine million workers who have auto-enrolment pensions will now have to pay more in. Monthly contributions will increase from a minimum of 1% to a minimum of 3%.
Thanks to the government’s triple lock mechanism, those with a State Pension will see their income rise by 3%.
The Pensions Lifetime Allowance – the most you can have in a pension pot without further tax charges – is also going up from £1m to £1,030,000.
Junior ISA allowance
Whilst the main ISA allowance will remain at £20,000, the Junior ISA allowance has increased to £4,260 from £4,128.
Buy-to-let tax relief
Before April 2017, landlords could deduct 100% of mortgage interest when calculating the profit tax was due on. This year, you will only be able to offset 50% of mortgage interest against profits. By 2020, this will be removed entirely, until everyone gets relief at the basic, 20%, rate.
Capital gains tax
The capital gains tax annual allowance will increase from £11,300 in 2017/18 to £11,700.
For more information on the 2018/19 tax changes or to discuss the new measures in more detail, call us on 01794 525500 or email firstname.lastname@example.org.