Personal allowances for 2018/19
For the 2018/19 tax year, the personal allowance is set at £11,850. As in previous years, the allowance is reduced by £1 for every £2 by which income exceeds £100,000. The effect of this is that for 2018/19 individuals with income of £123,700 or more will not receive a personal allowance.
For 2018/19, the marriage allowance is £1,190. Spouses and civil partners can transfer this to their partner, as long as the recipient is not a higher or additional rate taxpayer. Where the allowance would otherwise be wasted, claiming the marriage allowance will save the couple tax of £238 for 2018/19.
The other allowance for married couples and civil partners is the married couple’s allowance. This is only available where at least one partner was born before 6 April 1935. The allowance is set at £8,695 for 2018/19, but is reduced by £1 for every £2 by which income exceeds £28,900 until the level of the minimum allowance is reached – set at £3,360 for 2018/19.
The savings allowance is available to basic and higher rate taxpayers only – additional rate taxpayers do not benefit. The recipient is able to enjoy tax-free savings income up to the amount of the allowance (in addition to any savings income sheltered by the personal allowance). For 2018/19, as previously, the savings allowance is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
From 6 April 2018, the dividend allowance is reduced to £2,000 from £5,000. Dividends falling within this band are effectively tax-free, being taxed at a zero rate.
Income tax rates
Income tax rates for the UK excluding Scotland remain unchanged for 2018/19, with a basic rate of 20%, a higher rate of 40% and an additional rate of 45%. The basic rate applies to the first £34,500 of taxable income, the higher rate to the next £115,500 and the additional rate to taxable income in excess of £150,000. Scottish taxpayers pay income tax on their non-savings non-dividend income at the Scottish rates of income tax (for which new bands and rates apply for 2018/19).
Dividend tax rates
The dividend rates are also unchanged for 2018/19, remaining at 7.5% to the extent that taxable dividend income falls with the basic rate band, at 32.5% to the extent to which it falls in the higher rate band and at 38.1% to the extent that it falls within the additional rate band. The dividend rates apply to the whole of the UK, including Scottish taxpayers.
Capital gains tax
For 2018/19 the capital gains tax annual exempt amount is increased to £11,700. However, the rates of capital gains tax remain unchanged with gains chargeable at a rate of 10% to the extent that total income and gains do not exceed the basic rate band (set at £34,500 for 2018/19), and at 20% thereafter. Higher rates apply to chargeable gains on residential property, of 18% and 28% respectively.
The rate of corporation tax remains at 19% for the financial year 2018, starting on 1 April 2018.