2018 Tax Cards

• * PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £123,000 or more (2017/18: £123,000).
• † The part of the PA that is transferable to a spouse or civil partner who is not a higher or top rate taxpayer.
• ** If gross income exceeds it, the limit may be deducted instead of actual expenses.

• BRB (Scotland: intermediate rate band) and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.

• General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). Scottish taxpayers are taxed at different rates on general income (see below).
• To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.
• The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.
• Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 (2017/18: £5,000) of dividend income at nil, rather than the rate that would otherwise apply.

• The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.
• In 2017/18, the Scottish rates were the same as in the rest of the UK, except that the higher rate band began at £31,501 rather than £33,501.

 High Income Child Benefit Charge (HICBC)

1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.

• Annual relievable pension inputs are the higher of earnings (capped at AA) or £3,600.

• †applies to those reaching state retirement age after 5 April 2016.

• *For 2018/19, amount over £1m must be invested in ‘knowledge-intensive’ companies.

Class 1 (Employees)

• *Nil rate of employer NIC for employees under the age of 21 and apprentices under 25, up to £892pw.
• **Some businesses do not qualify, including certain sole director companies.
• Employer contributions (at 13.8%) are also due on most taxable benefits (Class 1A) and on tax paid on an employee’s behalf under a PAYE settlement agreement (Class 1B).

Class 2 (Self-employed)

Class 3 (Voluntary)

Class 4 (Self-employed)

Cars

Taxable benefit: Chargeable value multiplied by chargeable %.

Chargeable value:

Initial list price of car (including most accessories), reduced by any capital contribution (maximum £5,000) by employee when the car is first made available.

Chargeable percentage:

• *The percentages for petrol cars apply to diesel cars that meet the RDE2 standard.

Vans

Chargeable value of £3,350 (2017/18 £3,230) if private use is more than home-to-work. Electric vans £1340 (2017/18 £646).

Fuel

Employer provides fuel for private motoring in an employer-owned:

Car: CO2-based percentage from above table multiplied by £23,400 (2017/18 £22,600).

Van: £633 (2017/18 £610).

Employee contributions do not reduce taxable figure unless all private fuel is paid for by the employee (in which case there is no benefit charge).

• *Individuals are taxed at 18%/28% on gains on residential property and receipts of carried interest. Trusts and estates are taxed at 28% in these circumstances.
• **ER is available for lifetime gains of up to £10m. Qualifying disposals include a trading business and shares in a trading company (from a minimum 5% holding) by an officer/employee. Various conditions apply.

Shares in an unquoted trading company may be eligible for a 10% CGT rate on lifetime gains up to £10m, if disposed of after 5 April 2019 by someone who is neither a paid officer nor employee of the company (Investors’ Relief).

• *Additional deduction for qualifying R&D
• **Taxable expenditure credit for qualifying R&D

SMEs that make losses can surrender the deduction to HMRC in exchange for a payment of 14.5% of the loss.

• The special rate pool includes long life assets, integral plant in buildings, thermal insulation.

Annual Tax on Enveloped Dwellings (ATED)

ATED applies to ‘high value’ residential properties owned via a corporate structure, unless the property is used for a qualifying purpose. The tax applies to properties valued at more than £500,000.

Stamp Duty Land Tax (SDLT), Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT)

LTT replaces SDLT in Wales from 1 April 2018.

• A supplement of 3% of the total purchase price applies for all three taxes where an additional residential property is purchased for more than £40,000 (unless replacing a main residence). It is also payable by all corporate purchasers.

For SDLT:

• From 22.11.17, first-time buyers purchasing a property of up to £500,000 pay a nil rate on the first £300,000 of purchase price.
• A rate of 15% may apply to the total purchase price, where the property is valued above £500,000 and purchased by a ‘non-natural person’ (e.g. a company).

Value Added Tax

Flat Rate Scheme (FRS)

• If using FRS, the VAT paid by the business is a fixed percentage (based on business category) of ‘FRS turnover’ rather than the net of output tax over input tax. Input tax is usually not recoverable.

Cash accounting and Annual accounting schemes

• †RNRB is available for transfers of a main residence to direct descendents. It tapers away at the rate of £1 for every £2 of estate value above £2m.
• *Up to 100% of the proportion of a deceased spouse’s/civil partner’s unused NRB and RNRB band may be claimed to increment the current NRB and RNRB when the survivor dies.
• **Rate reduced to 36% if at least 10% of the relevant estate is left to charity. Unlimited exemption for transfers between spouses/civil partners, except if UK domiciled transferor and foreign domiciled transferee, where maximum exemption £325,000.
• 100% Business Property Relief (BPR) for all shareholdings in qualifying unquoted trading companies, qualifying unincorporated trading businesses and certain farmland/buildings.

Reduced tax charge on gifts within 7 years before death

• Annual exemptions for lifetime gifts include £3,000 per donor and £250 per recipient.

• *Non-residents with gains on UK residential property must pay CGT within 30 days of disposal unless already filing a self assessment tax return.

Corporation tax is due 9 months and 1 day from the end of the accounting period, unless a ‘large’ company paying by quarterly instalments.

You are advised to consult us before acting on any information contained herein.