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Tax Changes from April 2018/19


Tax Changes From April 2018 19

As per the latest announcements made in Autumn Budget in 2017, UK residents will have a tax-free personal allowance of £11,850 in the tax year 2018/19. But there are many other allowances which are available for use and if used correctly, can reduce the tax liability significantly.

Pensions Tax Relief

The Lifetime Allowance Limit has been increased from £1 million in 2017/18 to £1,030,000 in 2018/19. The lifetime allowance was started with £1.5 million in 2006. It is basically the upper amount that can be drawn from pension schemes.

Tax Year 2018/19 Tax Year 2017/18
Lifetime Allowance limit £1,030,000 £1 million
Annual Allowance limit £40,000 £40,000
*Tapered Annual Allowance (applies to income over this amount) £150,000 (including pension contributions) £150,000 (including pension contributions)
Money Purchase Annual Allowance £4,000 £4,000

*The annual allowance is reduced by £1 for every £2 of income over £150,000, to a minimum of £10,000.

Tax Free Savings Account

Junior ISA subscription limit has been increased from £4,128 to £4,260 for the year 2018/19. Junior ISA are available to parents whose child is under 18 and resides in the UK. The same amount has been revised for Child Trust Fund.

Tax Year 2018/19 Tax Year 2017/18
Individual Savings Account (ISA) subscription limit £20,000, of which £4,000 can be saved into a Lifetime ISA £20,000, of which £4,000 can be saved into a Lifetime ISA
Junior ISA subscription limit £4,260 £4,128
Child Trust Fund (CTF) subscription limit £4,260 £4,128

Inheritance Tax

Inheritance tax is the tax on the property of someone who’s died. For Inheritance Tax, the residence nil rate band limit has been increased from £100,000 to £125,000 in 2018/19.

Inheritance tax Tax Year 2018/19 Tax Year 2017/18
Rate (for estates) 40% 40%
Reduced rate (for estates leaving 10% or more to charity) 36% 36%
Rate (for chargeable lifetime transfers) 20% 20%
Nil rate band limit £325,000 £325,000
Residence nil rate band limit £125,000 £100,000

Stamp Duty and Land Tax (SDLT)

SDLT applies to purchases of properties in England and Northern Ireland.

Property Value – Residential Property Rate (%)
0-125,000 0
125,000-250,000 2
250,001-925,000 5
925,001-1,500,000 10
Above 1,500,000 12

Reduced rates are available for first-time buyers purchasing a home on or after 22 November 2017 for £500,000 or less. Those claiming the relief will pay no SDLT on the first £300,000 of the consideration and will pay 5% on any excess over £300,000. No relief will be available where the total purchase price is more than £500,000.

Higher rates of SDLT apply to purchases of additional residential properties such as second homes and buy-to-let properties acquired for more than £40,000. The higher rates will levy an additional 3% on the total price paid for the property up to a maximum of 15% if the purchase price is more than £1,500,000.

Annual Tax on Enveloped Dwellings

ATED charge is in respect of UK residential property valued at more than £500,000 held by non-natural persons such as companies. The rates for 2018-19 are given below:

Property value Tax Year 2018/19 Tax Year 2017/18
More than £500,000 but not more than £1m £3,600 £3,600
More than £1m but not more than £2m £7,250 £7,250
More than £2m but not more than £5m £24,250 £24,250
More than £5m but not more than £10m £56,550 £56,550
More than £10m but not more than £20m £113,400 £113,400
More than £20m £226,950 £226,950

Child Tax Credit

Certain changes were announced in the Child Tax Credit which will be applied in the year 2018/19. Disabled child element has been increased to £3,275 from £3,175. As for the severely disabled child element, the amount has been increased to £4,600 in 2018/19 from £4,465 in 2017/18.

Tax Year 2018/19 Tax Year 2017/18
Disabled child element £3,275 £3,175
Severely disabled child element £4,600 £4,465

VAT Rate

The Value Added Tax (VAT) was introduced in the year 1973 at a single rate of 10%. Currently, the standard rate is 20% which was increased from 17.5% in the year 2011. There has been no changes announced for the year 2018 w.r.t VAT.

April 2018 to 2019 April 2017 to 2018
Standard rate (applicable to most goods and services) 20% 20%
Reduced rate (applicable to energy saving materials and a few other goods) 5% 5%
Zero rate (applicable to most basic necessary items like cooking oil, cereals) 0% 0%

VAT registration and de-registration thresholds

From April 2018 From April 2017
VAT registration thresholds £85,000 £85,000
VAT deregistration threshold £83,000 £83,000

Mileage Allowance Payments

Mileage Allowance Payments (MAPs) are paid by employers to their employees for using their own vehicle for business travels. There are different rates for different vehicles being used. As for the year 2018, MAPs remains the same.

From April 2018 From April 2017
Car / van * £0.45 £0.45
Motorcycle £0.24 £0.24
Bicycle £0.20 £0.20

*£0.45 is for the first 10,000 miles. For anything greater than this, the rate is £0.25 for each subsequent mile.

Vehicle Excise Duty (VED)

Trade Licensing Rates

Vehicle type Tax year 2018 to 2019 Tax year 2017 to 2018
Considered for every type of vehicle £165 £165
Considering only bicycles and tricycles whose weight is less than 450 kg £88 £85

Motor Tricycles Rate

Engine size Tax year 2018 to 2019 Tax year 2017 to 2018
150cc and less £19 £18
Remaining motor tricycles £88 £85

Company Car Tax

Company car taxes are based on the CO2 emissions. The higher the emission of CO2, higher is the taxe The tax is calculated by applying percentage figure to the list price of the car.

Vehicle CO2 g/km 2018/19 % BIK rate(Petrol & Electric Cars) 2017/18 % BIK rate(Petrol & Electric Cars)
0 13% 9%
1-50 13% 9%
51-54 16% 13%
55-59 16% 13%
60-64 16% 13%
65-69 16% 13%
70-74 16% 13%
75 16% 13%
76-79 19% 17%
80-84 19% 17%
85-89 19% 17%
90-94 19% 17%
95-99 20% 18%
100-104 21% 19%
105-109 22% 20%
110-114 23% 21%
115-119 24% 22%
120-124 25% 23%
125-129 26% 24%
130-134 27% 25%
135-139 28% 26%
140-144 29% 27%
145-149 30% 28%
150-154 31% 29%
155-159 32% 30%
160-164 33% 31%
165-169 34% 32%
170-174 35% 33%
175-179 36% 34%
180-184 37% 35%
185-189 37% 36%
190-194 37% 37%
195-199 37% 37%
200+ 37% 37%

Fuel Duty

The UK fuel duty is included in the prices while paying for diesel, petrol, LPG and other fuels used for driving a vehicle or for domestic purposes. VAT and VED are also added on the fuel prices.

Fuel Duty- pound per litre Rate for 2018/19(£)
Unleaded petrol 0.5795
Light oil (other than unleaded petrol or aviation gasoline) 0.6767
Aviation gasoline (Avgas) 0.377
Light oil delivered to an approved person for use as furnace fuel 0.107
Heavy oil (diesel) 0.5795
Marked gas oil 0.1114
Fuel oil 0.107
Heavy oil other than fuel oil, gas oil or kerosene used as fuel 0.107
Kerosene to be used as motor fuel off road or in an excepted vehicle 0.1114
Bio-ethanol 0.5795
Bio-diesel 0.5795
Bio-diesel for non-road use 0.1114
Bio-diesel blended with gas oil not for road fuel use 0.1114
Liquefied petroleum gas (£ per kilogram) 0.3161
Road fuel natural gas including biogas (£ per kilogram) 0.247

Air Passenger Duty (APD)

Air Passenger Duty is similar to any other excise duty which is charged on the carriage of passengers. Currently there are two bands

Band A – When the travel distance is between 0 to 2000 miles, this duty is applicable. This distance covers all of EU, EEA and a few other countries.

Band B – When the travel distance is above 2000 miles, this duty is applicable.

Bands and Rates Tax year 2018 to 2019 Tax year 2017 to 2018
Band A (from 0 to 2000 miles) Reduced Rate £13.00 £13.00
Standard Rate £26.00 £26.00
Higher Rate £78.00 £78.00
Band B (2000 miles and above) Reduced Rate £75.00 £78.00
Standard Rate £150.00 £156.00
Higher Rate £450.00 £468.00

Recommended Articles

Capital Gains Tax for 2018/19
Corporation Tax for 2018/19
National Insurance Contributions for 2018/19
Personal Tax Allowance for 2018/19

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