As of April 6 2018 a number of tax changes have been made adjusting personal allowance and income tax bands. Significant alterations have also been made to the Scottish budget as for the first time Scottish taxpayers have their own separate rates. Click here to view tax tables 2018/19
The personal allowance for 2018/19 is £11,850. However, some individuals do not benefit from the full personal allowance. There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000, which 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.
The basic rate of tax is currently 20%. From 6 April 2018 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.
The tax on income (other than savings and dividend income) is different for taxpayers who are resident in Scotland to taxpayers resident elsewhere in the UK. The Scottish income tax rates and bands apply to income such as employment income, self-employed trade profits and property income.
In the 2018/19 Scottish Budget, the Finance and Constitution Secretary for Scotland, Derek Mackay announced significant changes to income tax bands and rates for Scottish resident taxpayers, introducing five possible rates. The rates range between 19% and 46%. Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK.
|
Scottish Bands £ |
Band name |
Scottish Rate |
|
£0-£11,850 |
Personal allowance |
0% |
|
£11,850*- £13,850 |
Starter Rate |
19% |
|
£13,850- £24,000 |
Basic Rate |
20% |
|
£24,000- £43,430 |
Intermediate Rate |
21% |
|
£43,430-£150,000** |
Higher Rate |
41% |
|
Over £150,000 |
Top Rate |
46% |
* Assumes person is in receipt of the Standard UK Personal Allowance
** Personal Allowance is reduced by £1 for every £2 earned over £100,000
From April 2019, the National Assembly for Wales has the right to vary the rates of income tax payable by Welsh taxpayers.
Dividend allowance down to £2,000
In 2017/18 the first £5,000 of dividends are chargeable to tax at 0% (the Dividend Allowance). From 6 April 2018 the Dividend Allowance is reduced to £2,000. Dividends received above the allowance are taxed at the following rates.
- 7.5% for basic rate taxpayers
- 32.5% for higher rate taxpayers
- 38.1% for additional rate taxpayers.
Contact us if you require advice on the recent changes.
- Planning ahead for commercial property purchases - maximise tax relief
- Proposed tax rates and allowances for 2018/19
