We always try to keep you up-to-date with the latest changes which could affect you, so here is our summary of the Chancellor’s statement issues recently.
Mr. Hammond commented that UK economic growth remains disappointing, now forecast at 1.5% growth. In addition, inflation at 3% in January was above the government’s target. However, with the price of fuel reducing and other costs such as food being taken in account, this may be about to stabilise.
There will be tax and other changes in April, some of which date back to the pre-election 2017 Spring Budget. However, there will be no new tax measures from this Spring Statement.
Income Tax
Income tax allowances were increased in the November 2017 Budget. For 2018/19 personal allowances rises to £11,850 and the basic rate band rises to £34,500, making the higher rate threshold £46,350 (the sum of the two).
The dividend tax allowance will fall in 2018/19 from £5,000 to £2000 for the coming tax year and could mean extra tax of up to £1,143 on dividend income in 2018/19.
National Insurance Contributions
The NICs threshold will be increased by 3%. The upper earnings limit for employees and upper profits limit for the self-employed will rise to £46,350. Class 2 NICs will go on for 2018/19 at £2.95 a week until they disappear in 2019/20.
Company Cars
Company car tax will rise for all but the highest emission vehicles from 6 April. The taxable cash equivalents will increase as follow:
- Cars with CO₂ emissions of up to 50 g/km will see a 4% increase to 13%. Cars with emissions between 51 and 75 g/km will increase to 16%.
- Charges for cars with CO₂ emissions above 75 g/km will rise by 2%, subject to the current ceiling of 37% of list price for all vehicles.
- The diesel surcharge will increase to 4% for diesel cars which do not meet the RDE2 emission standard.
Inheritance Tax (IHT)
The residence nil rate band will rise to £125,000 in 2018/19. The main nil rate band will remain at £325,000.
Automatic Pensions Enrolment
The minimum contribution levels for workplace pensions will rise from 6 April 2018:
|
2017/18 |
2018/19 |
|
| Employer minimum contribution | 1% of band earnings
(£5,876 – £45,000) |
2% of band earnings
(£6,032 – £46,350) |
| Employee contribution | 1% of band earnings
(£5,876 – £45,000) |
3% of band earnings
(£6,032 – £46,350) |
| Total minimum contribution | 2% of band earnings
(£5,876 – £45,000) |
5% of band earnings
(£6,032 – £46,350) |
Pensions – Lifetime Allowance
The lifetime allowance will rise in line with inflation from £1 million to £1.03 million for 2018/19.
Payments In Lieu of Notice
Payments where employees do not work their notice for any reason will be subject to income tax and NICs in 2018/19. Tax and NICs will be charged on any payment that corresponds to the earnings they would have received if they had worked their notice.
2018/19 Tax Data
This information is available below to read or download.
If you have any questions regarding the Spring Statement please call Vincent & Co on 01803 500 500 and we will talk you through the implications of these changes for you.
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