New Year, New Taxes

/ Tax

Author: Henry Ejdelbaum

Tags: Accountants, accounting, Allowance, Employment, IHT, Minimum wage, Tax, tax year

On Friday we’ll be ‘celebrating’ the new tax year, as accountants have since 1752. Should we all be celebrating its advent? Well, even though we like tax, it’s complicated.

On the one hand, everybody will have a little bit more money in their pocket before they hit the tax threshold as the personal allowance increases on Friday to £11,850, up £350, but the question is whether that will mean much at the checkout with inflation running at 2.7% in February this year. The government still plans to eventually get the personal allowance up to £15,000 on an incremental basis, which will make a difference, but you probably shouldn’t look a gift horse in the mouth.

The Inheritance Tax (IHT) allowance threshold has, somewhat inevitably, stayed the same at £325,000, but the additional Residence Nil Rate Band, which applies when a residence is passed to a direct descendent is set at £125,000. Just like your IHT allowance you can pass this directly on to a surviving spouse or civil partner.

The employment allowance for businesses remains at £3,000 for the 2018/2019 tax year. However, a wrinkle in this has appeared, businesses with a sole employee who is also a director are no longer eligible for this. Something to keep in mind if you are a micro business.

The National Living/Minimum Wage will increase for all bands, at different rates, with the headline figure for those 25 years old or over, up 33p at £7.83.

Most importantly for businesses across the country, there are changes coming as of Friday for automatic pension enrolment. If you’re overpaying, don’t worry, but if not, together the employee and business’ contribution must total at least 5%.

To keep ahead of any changes to your business’ and personal tax position, you should engage with an accountant who likes tax, and who will deal with it for you. All of it.