There was an increase in the Chancellor’s first Autumn Budget of the tax-free personal allowances and National Insurance thresholds from the 6 April 2018. Have you considered the effect the changes will have on your tax bill?

The Chancellor in the Autumn Budget of 2017 uplifted the personal (tax-free) allowance and basic rate band towards the target that he indicated he would set for this parliamentary term. He also increased the National insurance thresholds to align with the tax-free amendments. Below is a table showing the current and next year’s tax and NIC thresholds, including tax allowances.

If the income you earnt for the current tax period (2017/18) and the next tax period (2018/19) is greater than the personal allowances plus the basic rate band, the uplift will save you £340 of your income tax bill, However, NIC would’ve cost you an extra £103, if you are a company director or employee, or £73 if you are self-employed or a partner in a business. There is therefore a net saving of £237 or £267, respectively

For those director shareholders who use a combination of a low salary plus dividends the changes to the dividend nil rate band will have an effect on your tax bill for the tax period 2018/19.

The effect of the changes to a higher rate taxpayer with at least £5,000 of their income for the current tax period 2017/18 and £2,000 in the next tax period 2018/19 taken as dividends, they will pay an extra £199 in tax on the same income.