Our latest update contains the 2018/19 tax rates and announcements from the Chancellor's Spring Statement
Our 2018/19 tax rates card is now available. Click here to download.
This contains a whole range of tax rates and limits for all aspects of business and personal tax. It also covers state pension, minimum wage and property taxes.
All of this information can also be found on the resources our website.
As announced last year, the Chancellor’s Budget will in future take place in the Autumn each year as opposed to the Spring. There was however, a Statement by the Chancellor on 13 March, but he made little mention of tax changes, instead choosing to focus on the state of the economy and stating that there is “light at the end of the tunnel”.
The Chancellor did however announce a number of tax consultations into possible future changes. One of the consultations relates to possible changes to the VAT registration threshold as it is concerned that some businesses deliberately operate below the VAT threshold (currently £85,000) as that adds 20% to the price of the goods and services. One suggestion is that businesses could be allowed to exceed the threshold by up to 50% for one year without the need to register for VAT.
For many years accountants and tax advisors have suggested that director/shareholders should extract profit by paying themselves a low salary with the remainder of their income being extracted in the form of dividends.
The starting point of NICs will rise to £162 a week from 6 April 2018. This is now significantly lower than the £11,850 personal income tax allowance.
We are suggesting paying an annual salary of £11,850, as the additional salary would save corporation tax at 19% of £651, whereas the employees NIC would be £411.
As far as the level of dividends is concerned, the rate of tax changes from 7.5% to 32.5% at £46,350, so ideally the dividends should not exceed £34,500 if a salary of £11,850 is paid. The first £2,000 would be taxed at 0% with £32,500 being taxed at 7.5%. Don’t forget that this tax will then be due on 31 January 2020.
Contact us to discuss other ways in which you can extract profits from your family company tax efficiently.
The Scotland Act 2016 provides the Scottish Parliament with the power to set all income tax rates and bands that will apply to Scottish taxpayers income for tax year 2018/19.
From 2018/19, the Scottish higher income tax rate will be 41% on income between £43,430 and £150,000 where the top rate is 46%. Note that under the Scottish system there is a 19% starting band on the first £2,000 of taxable income and an intermediate rate of 21% for income between £24,000 and £43,430. The 20% rate applies to income between £13,850 and £24,000 (taxable income £2,001 to £12,150).
If you employ Scottish taxpayers they have a special S PAYE code so that payroll software collects the tax correctly.
