Ringing in the 2017/2018 tax year!
As the 2016/2017 tax year came to a close, the beginning of April 2017 saw many important changes to financial rules and regulations. Here are my top 4 basic things to take note of.
1. Income Tax Rates
For the first time Scotland has different tax thresholds from the rest of the UK. Additional rate (45%) tax payers who are resident in Scotland will have the same tax threshold as the rest of the UK but more earners on the basic rate (20%) who live in Scotland will be pushed into the higher (40%) income tax rate bracket than those living in other regions of the UK.
Basic rate Scotland (20%) >£11,500 – £43,000 Rest of the UK (20%) >£11,500– £45,000
Higher rate Scotland (40%) >£43,000 - £150,000 Rest of the UK (40%) >£45,000 -£150,000
Additional rate - UK (45%) >£150,000
As you can see non-Scotland UK residents will be able to earn £2,000 more whilst being taxed at the basic rate of 20% than those resident in Scotland before having to pay the higher rate of tax at 40%.
2.National minimum and living wage
Another first, the date of implementing the annual wage increase for over and under 25’s has been aligned so that the changes of all age-related wage tiers and those for apprentices come into effect on the same day – April 1st as of 2017. This should make it easier for employers, however make sure you don’t get caught out by this change.
As of April 1st 2017 the following minimum salaries apply:
>25 £7.50
21-24 £7.05
18-20 £5.60
>18 £4.05
Apprentice £3.50
3.Personal Allowance
The good news is that your tax free personal allowance for the year 2017/2018 has increased by £500 and you can now earn £11,500 before paying any tax (assuming you are on the basic UK tax code), this is crucial to know when filling in your self-assessment assessment form.
4.Personal tax codes
It is your responsibility to check that you are on the correct tax code. With the personal allowance having been increased to £11,500, depending on your working circumstances, you should either have a 1150L or S1150L code if you are resident in Scotland and being taxed on the basic rate. If your circumstances are slightly more complicated, for instance you receive a company car or a pension then you will most likely have a different tax code but the new personal allowance will have been taken into account.
Your employer will be sent a new tax code for you, if applicable, so that they can update their payroll system or if you are self-employed, you will need this for your self-assessment tax return so when HMRC send you it through the post make sure your keep it safe!
If you would like to know more about these changes then please get in touch with Rebus Bookkeeping on 07720910886.
