Following on from last month’s budget, we’ve identified a few of the most important elements for SMEs. The first of these covers the changes to personal and business tax allowances for the new tax year starting in April 2018.
Rates and allowances
For 2018/19, the personal allowance will be increased to £11,850 and the basic rate limit to £34,500, so that the level of higher rate income tax starts at £34,501 and this is 40%.
The higher rate limit remains unchanged at £150,000 and above. The basic (20%), higher (40%) and additional (45%) rates are all unchanged, as are the rates on dividends and savings income.
The personal savings allowance, starting rate for savings and starting rate limit all stay at their 2017/18 levels but the dividend allowance is reduced from £5,000 to £2,000 for 2018/19 onwards as legislated for in Finance (No 2) Act 2017.
Other income tax personal reliefs are increased in line with inflation, as is the capital gains tax annual exempt amount which becomes £11,700 from 6 April 2018. Rates of capital gains tax are unchanged, as are income tax rates for trustees.
The increase in the personal allowance means that the transferable tax allowance for married persons (aka the marriage allowance) becomes £1,185 for 2018/19 and this includes civil partners.. The legislation does not currently allow transfers on behalf of deceased spouses or from a surviving spouse to a deceased spouse. With effect on and after 29 November 2017, regardless of when death occurred, an individual will be able to elect to transfer to a deceased spouse, and a deceased individual’s personal representatives will be able to make any transferable tax allowance election that the deceased could have made. Any such elections can be made at any time within the four years after the end of the tax year to which they relate, so this change is effectively backdated to 2015/16 when the transferable tax allowance was introduced.
100% first-year allowances are available on zero-emission goods vehicles and on gas refuelling equipment but only for expenditure incurred up to April 2018. This will be extended for a further three years so as to apply to expenditure incurred at any time before 6 April 2021 for zero-emission goods vehicles and 1 April 2021 for gas refuelling equipment. This applies equally for corporation tax purposes but by reference to 1 April 2021 for both types of expenditure.
MCC have been tax advisors in Manchester and Salford for many years. We offer a range of advise and guidance to SMEs across the region and can help you keep on top of your tax matters. Please give us a call for an initial discussion.