Trading and Property Allowances 2017/2018

New tax-free allowances for trading and property income are available for 2017/18 and later tax years. The allowances, each set at £1,000, mean that trading and/or property income no longer needs to be reported to HMRC where the income is less than £1,000 in the tax year. Where a person has both trading income and property income, he will be entitled to both allowances.

Where trading income or property income is more than £1,000, the profit or loss can be worked out in the usual way or the £1,000 allowance can be deducted rather than deducting actual expenses.

Marriage Allowance 2017/2018

The marriage allowance allows spouses and civil partners to transfer 10% of their personal allowance to their spouse/civil partner as long as the recipient is not a higher or additional rate taxpayer. For 2017/18 the marriage allowance is £1,150. Claiming the marriage allowance is worthwhile where it would otherwise be wasted. The allowance is worth £230 per couple for 2017/18.

Personal Allowance 06.04.16

The personal allowance is the amount of money you can earn without having to pay tax on it. It is calculated over the tax year which runs from 06 April to 5 April each year so if you are on PAYE, this amount is calculated per pay period (i.e divided by 12 for a monthly payroll)  After this amount has been earned, tax is paid at different rates as follows:-

The personal allowance is to increase to £11,000

The basic rate band is to increase to £32,000 (20%)

The higher rate limit will increase to £43,000 (40%)

Further increases are in place for the following year and legislation is also to be introduced so that the basic personal allowance will increase automatically in line with the equivalent of 30 hours a week at the National Minimum Wage for over 21s until the personal allowance reaches £12,500. In linking the personal allowance with the National Minimum Wage it will ensure that anyone working up to 30 hours per week on Minimum Wage will not pay any tax, however National Insurance would be payable.

Living Wage Introduced 01.04.16

From 01.04.16 the Government are introducing a new mandatory National Living Wage for all workers aged 25 and older. This will be £7.20 an hour.

The National Minimum Wage will continue to apply to employees under the age of 25.

For employers in sectors such as retail and hospitality where many workers are paid at the National Minimum Wage this increase will be significant. For example:-

An employee working 40 hours per week will receive an increase of £1,040 per annum so for a business with 25 employees who are all eligible for the new rate, the costs start at £26,000 per annum.  In addition to this increase both the Employers National Insurance Contribution and the Work Place Pension Contribution must be recalculated to ensure that employers realise what costs they will be facing.

To compensate for the increase, the Government have also introduced a rise in the employment allowance from £2,000 to £3,000 to reduce some employers National Insurance Contributions.