By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.
From April 2019, the National Assembly for Wales will be able to vary the rates of income tax payable by Welsh taxpayers.
Responsibility for many aspects of income tax will remain with the UK government, and the tax will continue to be collected by HMRC for Welsh taxpayers.
Here is how the process for setting Welsh rates of income tax will work –
From April 2019, the UK government will reduce each of the three income tax rates: basic, higher and additional rate, paid by Welsh taxpayers by 10 pence.
The National Assembly for Wales will then decide the three Welsh rates of income tax, which will be added to the reduced UK rates.
The combination of reduced UK rates plus the Welsh rates will determine the overall rate of income tax paid by Welsh taxpayers.
If the National Assembly for Wales approves each of the Welsh rates of income tax at 10p, this will mean the rates of income tax paid by Welsh taxpayers will continue to be the same as that paid by English and Northern Irish taxpayers.
However, the National Assembly for Wales may decide to set different rates ‘to reflect Wales’ unique social and economic circumstances’.
Internet link to Welsh Government website –
Meanwhile, the UK government has published a report, Universal Credit: supporting self employment which considers the issues faced by self employed claimants.
The report considers the impact of the Monthly Income Floor (MIF) earnings requirement.
To be eligible for Universal Credit (UC) claimants must earn the MIF.
However, the MIF assumes self employed claimants earn a regular income at least equal to the National Minimum Wage, and makes no provision for those with income and expenditure that vary from month to month.
The report states that the MIF has been designed with monthly paid employed individuals in mind rather than the self employed who may have more volatile earnings.
It also considers the current system which allows self employed individuals to be exempt from meeting the MIF for the first 12 months of self employment and whether this is sufficient.
The report urges the Government to extend the exemption period.
Link to internet and Universal CreditSelf Employed report –
Finally, it has previously been reported that the Enterprise Management Incentive State Aid approval lapsed on 6 April 2018.
On 15 May EU approval was granted however HMRC have not confirmed expressly that this approval will be backdated to 6 April 2018.
The Enterprise Management Incentive (EMI) allows selected employees (often key to the employer) to be given the opportunity to acquire a significant number of shares in their employer through the issue of options.
An EMI can offer significant tax advantages as the scheme allows options to be granted to employees which may allow the shares to be received without any tax bill arising until the shares are sold.
HMRC had previously warned that EMI share options granted in the period from 7 April 2018 until EU State Aid approval is received may not be eligible for the tax advantages afforded to option holders.
We await official confirmation on the position from HMRC.
Please contact the team at Clay Shaw Butler for specific advice on this issue.
Internet link to Europa press release –
You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) –
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