We’ve had the announcement of the Budget 2018.
But as ever the question on everyone’s lips is: how much better off will I be?
Here we give you the main headlines of the Budget 2018.
First, the Good News
In the Budget 2018 announcement, the Chancellor increased from 6 April 2019 the tax-free personal allowance from £11,850 to £12,500 and the basic rate band from £34,500 to £37,500, both with effect from 6th April next year.
The maximum tax savings for 2019/20 which result if your income is anything other than dividends are £730, £860 and £600 for basic rate, higher rate and additional rate taxpayers respectively.
Because the rates of tax for dividends are different, the tax savings are also different. For basic rate, higher rate and additional rate taxpayers the maximum savings are £799, £961 and £750 respectively.
Self-employed earners taxed on their profits and anyone on PAYE could pay higher NI contributions from next year. This is because of the increased upper earnings limit of £50,000, which means that more earnings will be charged at the higher rate.
The result is that you could pay an extra £413 in NI if you’re an employee or director or £310 if you’re self employed or a partner.
Directors of owner-managed businesses are still in the best position, with income being paid as a small salary and higher dividends still the most attractive route for most. Paying a salary of £8,632 for the year and dividends that will keep your income below £100,000 would save you £860 tax with no extra NI to pay.
Need tax advice? You can schedule a phone call with one of our team here.