Income Tax Autumn Budget 2018

Income Tax Rates 2019/20

• Starting rate tax for savings income unchanged at £5,000 pa with 0% tax
• £12,500 personal allowance, 0% income tax
• £37,500 basic rate band at 20% income tax
• Higher rate tax 40% therefore starts at £50,000
• Additional rate tax 45% starts at £150,000
• Dividend taxation remains unchanged: £2,000 tax free dividend allowance, then 7.5% tax if dividends fall within the basic rate tax band, 32.5% if dividends fall within the higher rate tax band and 38.1% if dividends fall above the additional rate tax band at £150,000
• Trustees of discretionary trusts are subject to income tax at 45% (38.1% on dividend income) on income above their standard rate band (normally £1,000).

Personal allowances 2019/20

• Personal allowance increases from £11,850 to £12,500. Where an individual’s adjusted net income exceeds £100,000, the level of the basic personal allowance continues to reduced by £1 for each £2 over £100,000 until it reaches zero. This means that in 2019/20 your personal allowance will reduce to zero if you income is £125,000 or more.
• The married couple’s allowance (MCA), where at least one spouse was born before 6 April 1935, is increased to £8,915. There is a reduction in the MCA remains for £1 for every £2 additional income in excess of the total income threshold £29,600. The MCA will not reduce below £3,450 (the “minimum amount”).
• Relief in respect of the MCA and maintenance payments continues to be given as a tax reduction at the rate of 10%.

The Personal Savings Allowance unchanged:

• Basic rate taxpayer, the first £1,000 of savings income 0% tax
• Higher rate taxpayer, the first £500 of savings income 0% tax
• Additional rate taxpayer, zero personal savings allowance.