By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants. The Money Matters column appears in the Pembrokeshire Herald, the Carmarthenshire Herald and the Llanelli Herald newspapers.
The Chancellor of the Exchequer Philip Hammond presented his second Autumn Budget this week.
In his speech, he stated that ‘austerity is coming to an end – but discipline will remain’.
He also promised a ‘double deal dividend’ if the Brexit negotiations are successful but stated that there may be a full-scale Spring Budget in 2019 if not.
At Clay Shaw Butler, we have produced a summary on the tax measures which may affect you, your family and your business.
Our summary concentrates on the tax measures which include:
- increases to the personal allowance and basic rate band
- extending off-payroll working to medium/large organisations in the private sector
- a temporary increase to the Annual Investment Allowance
- freezing the VAT registration threshold for a further two years
- changes to Entrepreneurs’ Relief and private residence relief
- measures to tackle the plastic problem.
Previously announced measures include:
- increases in car benefits
- plans for Making Tax Digital for Business
- extending the charge to gains on non-UK residents of non-residential UK property.
Some Budget proposals may be subject to amendment in the 2019 Spring Statement and subsequent Finance Act.
You should contact the team at Clay Shaw Butler before taking any action as a result of the contents of this summary.
Here are some points on personal tax changes.
The personal allowance is currently £11,850. The personal allowance for 2019/20 will be £12,500.
There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000 and the threshold has remained at this figure since its introduction for the 2010/11 tax year.
The reduction is £1 for every £2 of income above £100,000. So, for 2018/19, there is no personal allowance where adjusted net income exceeds £123,700. For 2019/20 there will be no personal allowance available where adjusted net income exceeds £125,000.
The marriage allowance permits certain couples, where neither pays tax at more than the basic rate, to transfer 10% of their personal allowance to their spouse or civil partner.
The marriage allowance reduces the recipient’s tax bill by up to £238 a year in 2018/19.
The marriage allowance was first introduced for 2015/16 and there are many couples who are entitled to claim but have not yet done so. It is possible to claim for all years back to 2015/16 where the entitlement conditions are met.
A recent change to the law allows backdated claims to be made by personal representatives of a deceased transferor spouse or civil partner.
The basic rate of tax is currently 20%. The band of income taxable at this rate is £34,500 so that the threshold at which the 40% band applies is £46,350 for those who are entitled to the full personal allowance. Additional rate taxpayers pay tax at 45% on their income in excess of £150,000.
Tax bands and rates 2019/20 –
The government has announced that for 2019/20 the basic rate band will be increased to £37,500 so that the threshold at which the 40% band applies is £50,000 for those who are entitled to the full personal allowance. The additional rate of tax of 45% remains payable on taxable income above £150,000.
From April, 2019, the Welsh Government has the right to vary the rates of income tax payable by Welsh taxpayers.
The UK government will reduce each of the three rates of income tax paid by Welsh taxpayers by 10 pence.
The Welsh Government has provisionally set the Welsh rate of income tax at 10 pence which will be added to the reduced UK rates.
This means the rates of income tax paid by Welsh taxpayers will continue to be the same as those paid by English and Northern Irish taxpayers.
The Welsh Government will need to confirm this proposal prior to their final Budget.
You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) – http://www.clayshawbutler.com/news/latest-news-for-business
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