The new tax year began on 6th April and this year has brought many financial changes that will impact all individuals and businesses. Here is a summary on some of the biggest changes:
1. The New National Minimum Wage
The minimum wage has increased for all workers, although some have seen more of a gain than others.
|Year||25 years and over||21 to 24 years||18 to 20 years||Under 18 years||Apprentice|
|New Rates from April 2018||£7.83||£7.38||£5.90||£4.20||£3.70|
2. Auto Enrolment Pension Contributions to Rise
Contributions have risen from a total of 2% with a 1% contribution from the employer and a 1% contribution from the employee. On Friday this increased to a total of 5% with 3% from the employee and 2% from the employer.
3. Increase in Personal Allowance
The amount you can earn without paying income tax has risen from £11,500 to £11,850, this works out as a tax cut of £70 for most people. The threshold for people paying the higher rate of income tax (40%) has also increased from £45,000 to £46,350.
4. Decrease in Dividend Allowance
Until Friday you could have earned £5,000 in dividends tax free. This has now decreased to only £2,000. Any dividends in excess of this will incur a tax charge of between 7.5% to 38.1%. If you are unclear how this impacts you, you should talk to your accountant.
5. Student Loan Repayments
Before now students had to repay their student loans at a rate of 9% on all earnings over £21,000. Now this threshold has been raised to £25,000. Leaving graduates up to £30 a month better off.
If you have any questions about these changes and what they mean for you then please feel free to contact us on 01733 699033.