Some points that may interest you from this week’s Budget:-
In England, Wales and Northern Ireland, stamp duty has been effectively abolished for many first time buyers with a zero rate being applied on houses with a purchase price of up to £300,000.
Those buying their first home at a purchase price of between £300,000 and £500,000 will also pay less stamp duty than before the Budget with no change where a home costs more than £500,000. The following table sets out how the changes will work:
Value of Property Purchased
|Before the Autumn Budget||
From 22nd November 2017
|£500,000 +||No change||
It should be noted that stamp duty policy in Wales will be devolved to the Welsh Government (to be called Land Transaction Tax) from April 2018 so the decision whether to continue to apply relief for first time buyers from that date will be made accordingly. Stamp Duty has been devolved to Scotland since April 2015 where it is called Land and Buildings Transaction Tax. The Scottish Government will publish their Draft Budget on 14 December so we will have to wait until then to see whether the Scottish Government will match (or better!) the UK Government’s changes for first time buyers.
Income tax changes from April 2018
The Personal Allowance, the first part of your taxable income on which the tax rate is 0%, will increase from £11,500 to £11,850. This is gradually withdrawn for those with taxable income of more than £100,000 and those with taxable income above £123,700 (2018/19) won’t get any allowance.
The basic rate tax band will increase from £33,500 to £34,500. Coupled with the change in the Personal Allowance, this means you will need to have taxable income of £46,350 or more in 2018/19 before you pay higher rate tax.
Higher rate tax will be payable on taxable income between £46,350 and £150,000, with additional rate tax applying to income above £150,000.
Since April 2017, the Scottish Government has had the ability to vary both the rate of income tax and the thresholds from which the various rates of income tax are payable.
The following applies to all UK taxpayers:-
The Lifetime Allowance will increase from £1,000,000 (2017/18) to £1,030,000 for those taking their pension benefits on or after 6th April 2018.
Annual Individual Savings Account (ISA) Allowance
The annual ISA allowance will remain unchanged at £20,000 for the tax year 2018/19. Anyone aged 16 or over can save in a cash ISA although stocks and shares are only available to investors aged 18 or over. The Junior ISA limit will rise to £4,260 from £4,128.
Capital Gains Tax (CGT)
The annual exemption allowance for individuals will increase from £11,300 in 2017/18 to £11,700 in 2018/19. For most trusts, this will rise from £5,650 currently to £5,850 in 2018/19.
Dividend Tax Allowance
It was announced in the March 2017 Budget that the £5,000 Dividend Tax Allowance would reduce to £2,000 from 6th April 2018. From that date, dividend income above £2,000 will be taxed at 7.5% (basic rate taxpayers), 32.5% (higher rate taxpayers) and 38.1% (additional rate taxpayers.)
Inheritance Tax (IHT)
No changes were announced to Inheritance Tax rates or allowances for 2018/19 in the Autumn Budget, however previously announced changes continue to take effect.
This year saw the introduction of the Residence Nil-Rate Band (RNRB), initially set at £100,000, this being an extra allowance on top of the standard nil-rate band of £325,000. For deaths in the following tax years the RNRB will be:
• £125,000 in 2018/19
• £150,000 in 2019/20
• £175,000 in 2020/21