Income Tax
Allowances
| Allowances | 2018/19 | 2017/18 |
|---|---|---|
| Personal Allowance (PA)*† | £11,850 | £11,500 |
| Blind Person’s Allowance | 2,390 | 2,320 |
| Rent a room relief ** | 7,500 | 7,500 |
| Trading Income ** | 1,000 | 1,000 |
| Property Income ** | 1,000 | 1,000 |
*PA will be withdrawn at £1 for every £2 by which ‘adjusted income’ exceeds £100,000. There will therefore be no allowance given if adjusted income is £123,700 or more (2017/18: £123,000).
† 10% of the PA (2018/19: £1,185; 2017/18: £1,150) can be transferred to a spouse or civil partner who is no more than a basic rate taxpayer.
** If gross income exceeds it, the limit may be deducted instead of actual expenses.
| Rate bands | 2018/19 | 2017/18 |
|---|---|---|
| Basic Rate Band (BRB) | £34,500 | £33,500 |
| Higher Rate Band (HRB) | 34,501-150,000 | 33,501-150,000 |
| Additional rate | over 150,000 | over 150,000 |
| Personal Savings Allowance (PSA) | ||
| – Basic rate taxpayer | 1,000 | 1,000 |
| – Higher rate taxpayer | 500 | 500 |
| Dividend Allowance (DA) | 2,000 | 5,000 |
BRB and additional rate threshold are increased by personal pension contributions (up to permitted limit) and Gift Aid donations.
Scottish taxpayers
The 2018/19 tax rates and bands for Scottish taxpayers have not been announced. For 2017/18, the basic rate band is £31,500.
| Tax rates | 2018/19 & 2017/18 | ||
|---|---|---|---|
| Rates differ for General/Savings/Dividend income | G | S | D |
| Basic rate | 20% | 20% | 7.5% |
| Higher rate | 40% | 40% | 32.5% |
| Additional rate | 45% | 45% | 38.1% |
General income (salary, pensions, business profits, rent) usually uses personal allowance, basic rate and higher rate bands before savings income (interest). To the extent that savings income falls in the first £5,000 of the basic rate band, it is taxed at nil rather than 20%.
The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%.
Dividends are normally taxed as the ‘top slice’ of income. The DA taxes the first £2,000 (2017/18: £5,000) of dividend income at nil, rather than the rate that would otherwise apply.
High Income Child Benefit Charge (HICBC)
1% of child benefit for each £100 of adjusted net income between £50,000 and £60,000.
| Remittance basis charge | 2018/19 | 2017/18 |
|---|---|---|
| For non-UK domiciled individuals who have been UK resident in at least: | ||
| 7 of the preceding 9 tax years | £30,000 | £30,000 |
| 12 of the preceding 14 tax years | 60,000 | 60,000 |
| 15 of the preceding 20 tax years | Deemed to be UK domiciled | |