Upcoming changes

Future rules, rates and allowances may affect your planning for 2017/18. 

Some changes from April 2018 include:

Personal allowance and threshold

The personal allowance for 2018/19 is £11,850. 

The basic rate band threshold increases to £34,500 in 2018/19. This means that individuals entitled to a full personal allowance will not be liable to higher rate tax until their total income exceeds £46,350 in 2018/19. 

The national insurance contributions upper earnings limit will also increase to remain in line with the higher rate threshold.

Income tax in Scotland is set for more major changes in 2018/19. The three band system will be replaced with five bands with tax rates ranging from 19% to 46%. Individuals entitled to a full personal allowance will begin paying the higher rate of tax at 41% when their income exceeds £44,273. 

Capital gains tax

The annual allowance increases to £11,700 for individuals and to £5,850 for most trusts.

ISAs 

The overall annual ISA subscription limit remains at £20,000 while the Junior ISA allowance increases to £4,260 from 6 April 2018.

Pensions

The pension lifetime allowance increases by £30,000 to £1.030 million.

Vehicles

From 6 April 2018, the van benefit charge will increase from £3,230 to £3,350 and the van fuel benefit charge will increase from £610 to £633.

Employees provided with fuel for private mileage in a company car will see the value of the multiplier used for calculating the cash equivalent of the fuel benefit increase from £22,600 to £23,400. This measure will apply from 6 April 2018. 

The diesel supplement used to calculate the company car benefit and company car fuel benefit will increase from 3% to 4% for all diesel cars registered on or after 1 January 1998 that do not meet real driving emissions step two standards (RDE2). Diesel cars which are certified to RDE2 standard will not be liable to the diesel supplement.

Changes from 1 January 2018: 

R&D

From 1 January 2018, the rate of tax relief available to companies that carry out qualifying R&D and claim the research and development expenditure credit (RDEC) increased from 11% to 12%.

Corporation tax

For a capital gain made by a company on or after 1 January 2018, the indexation allowance, which is applied in order to determine the amount of the chargeable gain, will only be calculated up to December 2017. This change means that for disposals made after this date, the indexation will no longer be calculated up to the month in which the disposal of the asset occurs.

Read about year-end planning for individuals and businesses.