Personal Taxation 2018/19

Main personal allowances

 2018/192017/18
Personal income tax allowance (PA)£11,850£11,500
Marriage allowance (transferable)1,1901,150
Blind person’s allowance2,3902,320
Rent-a-room relief7,5007,500
Trading Income1,0001,000
Property Income1,0001,000

Notes

  1. PA is reduced by £1 for every £2 by which Adjusted Net Income (ANI) exceeds £100,000, so PA is nil when ANI is £123,700.
  2. ANI is total taxable income, less qualifying pension contributions and Gift Aid donations.
  3. Marriage allowance is the transferable part of the PA and is available only to married couples and civil partners born after 5 April 1935. It can be transferred to their spouse or civil partner as long as the recipient is not a higher or top rate taxpayer.
  4. The rent-a-room exemption is available where the taxpayer lets out part of the home they live in as furnished residential accommodation.
  5. Where rent-a-room, trading or property income exceed the relevant limit above, that limit (rather than expenses) may be deducted from gross income.

Income tax bands

 2018/192017/18
Savings rate band£5,000£5,000
Basic rate band (BRB)34,50033,500
Higher rate band (HRB)34,501-150,00033,501-150,000
Additional rateover 150,000over 150,000
Personal Savings Allowance (PSA)
– Basic rate taxpayer1,0001,000
– Higher rate taxpayer500500
Dividend allowance2,0005,000

Notes

  1. The BRB (Scotland: intermediate rate band) and additional rate threshold are extended by the grossed-up equivalent of personal pension contributions and Gift Aid donations paid by the taxpayer in the tax year, or treated as paid in the tax year.
  2. Taxable income usually uses up the rate bands in the following order:
    • G ‘general income’ (employment, pensions, business profits, rent)
    • S ‘savings income’ (mainly interest)
    • D ‘dividends’ (distributions from companies/most unit trusts)
  3. The savings rate band only applies to savings income and taxes it at a nil rate. If taxable general income (‘non-savings income’) exceeds this band, the savings rate band does not apply.
  4. Different bands and rates apply to general income in Scotland (see below).

Income tax rates

 2018/19 & 2017/18
Rates differ for:GSD
Basic rate20%20%7.5%
Higher rate40%40%32.5%
Additional rate45%45%38.1%

Note

  1. The PSA taxes interest at nil, where it would otherwise be taxable at 20% or 40%. It is not available to a top rate taxpayer.
  2. Dividends are usually taxed as the ‘top slice’ of income. The Dividend Allowance taxes the first £2,000 of dividend income at nil rather than the rate that would otherwise apply.

Income tax bands and rates – Scotland (2018/19)

 BandRate
Starter rate£2,00019%
Basic rate2,001-12,15020%
Intermediate rate12,151-31,58021%
Higher rate31,581-150,00041%
Top rateover 150,00046%

Note

  1. The Scottish rates and bands do not apply for savings and dividend income, which are taxed at normal UK rates.
  2. In 2017/18, the Scottish rates were the same as in the rest of the UK, except that the higher rate band began at £31,501 rather than £33,501.

Remittance basis charge

Resident in the UK for2018/192017/18
7 of the preceding 9 tax years£30,000£30,000
12 of the preceding 14 tax years60,00060,000
15 of the preceding 20 tax yearsDeemed to be UK domiciled

Note

  1. The remittance basis charge (RBC) is payable by non-UK domiciled individuals who claim the remittance basis and who have been resident in the UK for the periods shown.

Residential landlords

 2018/192017/18
Proportion of finance costs allowable against letting income50%75%

Notes

  1. Finance costs comprise mainly interest, but includes related matters such as arrangement fees.
  2. A tax reducer at 20% of the disallowed finance costs is available to reduce the landlord’s income tax liability, but is subject to certain restrictions.
  3. The phasing out of deductible finance costs will continue through to 2020/21, when only basic rate relief as a tax reducer will be available.
  4. These rules do not affect qualifying furnished holiday lets, commercial property or corporate landlords.

High Income Child Benefit charge (HICBC)

 2018/192017/18
Lower threshold£50,000£50,000
Upper threshold60,00060,000

Notes

  1. Only applicable to families who receive child benefit, where adjusted net income of highest earner is above lower threshold.
  2. HICBC is equivalent to 1% of child benefit received by the family, for every £100 of adjusted net income over lower threshold.
  3. Highest earner in family must declare child benefit received by them or their partner on their tax return.
  4. The recipient of child benefit can elect not to receive it in order to avoid the HICBC, without losing their right to accrue certain state benefits. Child benefit payments can subsequently be recommenced if the claimant chooses.