6th April marks the start of the new tax year 2017-18 in UK. Below are the main changes you should be aware of.
- Income Tax
The Personal Allowance is the annual amount you can earn before you pay tax. From 6th April, the amount is rising from £11,000 to £11,500. The change in the Personal Allowance means that the basic rate taxpayers will take home an extra £100 a year.
- The National Living Wage
The National Wage is to rise to £7.50 per hour from April this year in line with Chancellor Philip Hammond’s Spring Statement. The national minimum wage will also increase:
Apprentices – from £3.40 per hour to £ 3.50 per hour
16-17 year olds – from £4.00 per hour to £4.05 per hour
18-20 year olds – from £5.55 per hour to £5.60 per hour
21-24 year olds – from £6.95 per hour to £7.05 per hour
- Corporation Tax
There will be a further reduction in Corporation Tax, which is currently charged on profits at 20%. It was announced previously that from 1st April 2017 the corporation tax would be reduced to 19% and from 1st April 2020 again to 17%. This measure will benefit over a million companies, large and small. It will also ensure that UK has the lowest corporation tax rate in the G20.
- National Insurance Contributions
Currently, the self-employed may have to pay both Class 4 and Class 2 NICs. The current rates are:
Class 4 NICs at 9% are paid on profits between £8,060 and £43,000
Class 2 NICs are paid on profits of £5,965 or more
From 2018, Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019.
- Individual savings account (ISAs)
The amount you can save tax-free in an ISA is increasing from £15,240 to £20,000 from 6th April. Your allowance can be invested into a Cash ISA, Stock and Shares ISA or an Innovative Finance ISA. On the 6th April, the new Lifetime ISA was launched for those aged over 18 but under 40. This will allow you to save up to £4,000 a year to put towards your retirement or buying your home. You will also receive a 25% bonus from the Government worth up to £1,000 each year until you are 50. You can choose between either a Cash or Stocks and Shares Lifetime ISA and contributions will count towards your overall annual ISA allowance limit.
- Capital Gains Tax (CGT)
The tax-free allowance for Capital Gains Tax a levy on the profits made from the sales of assets will increase from £11,100 to £11,300. Whether you need to pay CGT and the actual amount will depend on the type of assets you are selling and your tax situation.