Budget 2018 tax tables: what the government’s changes mean for you

Accountants Blick Rothenberg crunch the numbers to calculate the winners and losers from the Budget

Nimesh Shah
Partner at Blick Rothenberg
Monday 29 October 2018 22:54
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Budget 2018: Philip Hammond increases tax-free personal allowance

The winners in this Budget are readily identifiable. First: middle and high earners. Those earning less than £100,000 will benefit from a higher personal allowance of £12,500 and increased basic rate tax band of £37,500 – and so will not pay 40% tax until earnings reach £50,000. An individual basic rate taxpayer will be £130 better off as a result of the higher personal allowance.

Entrepreneurs will also gain. Despite calls from some quarters to abolish the £10m entrepreneurs’ relief allowance, the chancellor decided to revise the provision to increase the minimum holding period from one year to two years. The increased timeframe is unlikely to affect many, as most entrepreneurs recognise that it takes more than two years to establish a successful business that they will sell.

Businesses generally could gain. There was speculation that the proposed corporation tax cut to 17 per cent from 1 April 2020 could be scrapped – but this has remained. In addition, businesses will benefit from a temporary increased “Annual Investment Allowance” of £1m (from the current £200,000), which provides a full deduction on capital expenditure.

As for losers, let’s take top earners. When someone earns more than £100,000 of income, they start to lose their personal allowance by £1 for every £2 of income they earn over this threshold. This creates an effective rate of tax of 60 per cent. The increase in the personal allowance means the 60 per cent effective rate of tax remains in effect for longer than before – between £100,000 and £125,000. However, because the chancellor, unexpectedly, left tax relief on pensions contributions alone, someone in this position could make a substantial contribution to their pension pot to bring themselves back under the £100,000 mark (if they have the scope to do so under the pension relief rules).

Then there are homeowners. The chancellor has proposed two new changes to main residence relief, when selling your home. The main proposed change is to shorten the current 18-month exemption to nine months, meaning a shorter period for people to move house and not be subject to capital gains tax. The second proposed change effectively relates to abolishing the £40,000 “lettings relief”, which applies when someone lets out their home. “Lettings relief” can be worth up to £11,200 in Capital Gains Tax.

Last, in contrast to beer, sprits and cider drinkers – wine connoisseurs. While duty rates on beer and spirits will be frozen, the duty on wine will increase in line with inflation. Those who enjoy a glass of their favourite red should do so before 1 February 2019, when the higher duty applies (but they should drink responsibly of course).

Nimesh Shah is a partner at Blick Rothenberg, leading accounting, tax and advisory specialists

Married (or civil partnership) couple, two earners, two children

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 21,206 21,206 +0
£15,000 23,967 23,980 +1
£20,000 26,457 26,529 +6
£25,000 28,340 28,422 +7
£30,000 30,035 30,119 +7
£35,000 32,314 32,420 +9
£40,000 35,751 35,870 +10
£45,000 39,151 39,270 +10
£50,000 42,551 42,670 +10
£60,000 49,351 49,470 +10
£70,000 56,119 56,323 +17
£80,000 61,656 61,860 +17
£90,000 66,597 66,800 +17
£100,000 72,730 72,934 +17
£125,000 88,063 88,267 +17
£150,000 103,032 103,308 +23
£175,000 114,198 114,472 +23

Married (or civil partner) couple, one earner, two children

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 21,017 21,042 +2
£15,000 22,974 23,142 +14
£20,000 24,324 24,492 +14
£25,000 25,674 25,842 +14
£30,000 27,024 27,192 +14
£35,000 29,207 29,375 +14
£40,000 32,607 32,775 +14
£45,000 35,770 36,175 +14
£50,000 38,805 39,325 +43
£60,000 42,816 43,336 +43
£70,000 48,616 49,136 +43
£80,000 54,416 54,936 +43
£90,000 60,216 60,736 +43
£100,000 66,016 66,536 +43
£125,000 75,776 76,036 +22
£150,000 90,276 90,536 +22
£175,000 103,526 103,786 +22

Married pensioners (born after 5th April 1935)

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 10,000 10,000 +0
£15,000 15,000 15,000 +0
£20,000 19,940 20,083 +12
£25,000 24,274 24,417 +12
£30,000 28,607 28,750 +12
£35,000 32,703 32,833 +11
£40,000 36,740 37,000 +22
£45,000 40,740 41,000 +22
£50,000 44,740 45,000 +22
£60,000 52,740 53,000 +22
£70,000 60,667 61,000 +27
£80,000 67,343 68,333 +83
£90,000 74,010 75,000 +83
£100,000 80,677 81,667 +83
£125,000 97,343 98,333 +83
£150,000 113,280 115,000 +143
£175,000 124,947 126,667 +143

Single pensioner

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 10,000 10,000 +0
£15,000 14,370 14,500 +11
£20,000 18,370 18,500 +11
£25,000 22,370 22,500 +11
£30,000 26,370 26,500 +11
£35,000 30,300 30,500 +11
£40,000 34,370 34,500 +11
£45,000 38,370 38,500 +11
£50,000 41,640 42,500 +72
£60,000 47,640 48,500 +72
£70,000 53,640 54,500 +72
£80,000 59,640 60,500 +72
£90,000 65,640 66,500 +72
£100,000 71,640 72,500 +72
£125,000 81,900 82,500 +50
£150,000 96,900 97,500 +50
£175,000 110,650 111,250 +50

Single person, no children

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 11,113 11,138 +2
£15,000 13,581 13,736 +13
£20,000 16,981 17,136 +13
£25,000 20,381 20,536 +13
£30,000 23,781 23,936 +13
£35,000 27,181 27,336 +13
£40,000 30,581 30,736 +13
£45,000 33,981 34,136 +13
£50,000 37,016 37,536 +43
£60,000 42,816 43,336 +43
£70,000 48,616 49,136 +43
£80,000 54,416 54,936 +43
£90,000 60,216 60,736 +43
£100,000 66,016 66,536 +43
£125,000 75,776 76,036 +22
£150,000 90,276 90,536 +22
£175,000 103,526 103,786 +22

Single person, one child

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 17,524 17,549 +2
£15,000 19,244 19,399 +13
£20,000 20,594 20,749 +5
£25,000 21,944 22,099 +5
£30,000 24,857 25,097 +5
£35,000 28,257 28,412 +5
£40,000 31,657 31,812 +5
£45,000 35,057 35,212 +5
£50,000 38,092 38,612 +43
£60,000 42,816 43,336 +43
£70,000 48,616 49,136 +43
£80,000 54,416 54,936 +43
£90,000 60,216 60,736 +43
£100,000 66,016 66,536 +43
£125,000 75,776 76,036 +22
£150,000 90,276 90,536 +22
£175,000 103,526 103,786                    +22

Single person, self-employed

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 11,007 11,023 +1
£15,000 13,625 13,771 +12
£20,000 17,175 17,321 +12
£25,000 20,725 20,871 +12
£30,000 24,275 24,421 +12
£35,000 27,825 27,971 +12
£40,000 31,375 31,521 +12
£45,000 34,925 35,071 +12
£50,000 38,000 38,621 +52
£60,000 43,800 44,421 +52
£70,000 49,600 50,221 +52
£80,000 55,400 56,021 +52
£90,000 61,200 60,821 +52
£100,000 67,000 67,621 +52
£125,000 76,760 77,121 +30
£150,000 91,260 91,621 +30
£175,000 104,510 104,871 +30

Unmarried couple, both earning

Salary

Net Income 2018/2019 Net Income 2019/2020 Monthly gain/loss 2019/2020
£10,000 11,302 11,302 +0
£15,000 14,811 14,836 +2
£20,000 19,114 19,269 +13
£25,000 23,047 23,202 +13
£30,000 26,792 26,972 +15
£35,000 30,525 30,705 +15
£40,000 33,962 34,272 +26
£45,000 37,362 37,672 +26
£50,000 40,762 41,702 +26
£60,000 47,562 47,872 +26
£70,000 54,330 54,672 +28
£80,000 60,463 61,138 +56
£90,000 66,597 67,272 +56
£100,000 72,730 73,405 +56
£125,000 88,063 88,738 +56
£150,000 103,032 104,072 +87
£175,000 113,726 115,238 +87

Tables compiled by Paul Haywood-Schiefer ATT at Blick Rothenberg LLP

*Data assumes: where both members of a couple are earning, the income is split two thirds to one third; all earners work 30+ hours; no investment income received; all children under 16; tables include tax credits (working and child tax credits and child benefit where applicable; no pension contributions or gift aid payments; tables do not include blind person’s allowance; transferable allowance only available to married couples and civil partners who are not in receipt of married couple’s allowance, and only where a spouse or civil partner has not used all of their personal allowance and their partner is not a higher or additional rate taxpayer

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