As the UK tax year comes to an end, you may not have considered how the new devolved Scottish rate of income tax (SRIT) will affect you, your business or your family. Here are three things which you should know about tax in 2018/19.
Taxpayers in the UK, excluding Scotland, will benefit from an extra £350 a year tax-free through the Personal Allowance, meaning that they will now only be taxed from £11,850. If a taxpayer earns more than £100,000 a year, the rate will be reduced by £1 for every £2 of adjusted net income.
If a taxpayer is based in Scotland, they will also benefit from £11,850 of tax-free income. However, Scottish rates differ and will be based on a new devolved band system from April.
Married Couple’s Allowance
Married Couple’s Allowance- for those living in England, Wales and Northern Ireland – will increase to £8,695, compared to the current £8,445 threshold.
If you are a Scottish taxpayer, you will still be entitled to the Married Couple’s Allowance, and HMRC has said it will work with the Government to ensure that all those claiming the relief in Scotland can do so at the current rate (20 per cent).
Capital Gains Tax (CGT)
Capital Gains Tax – the tax on the profit you make when you sell or dispose of an asset – is calculated on where an asset is based and therefore Scottish taxpayers and other taxpayers in the UK will be treated the same if they buy an asset in the same country.
Although Capital Gains Tax rate remains the same for assets purchased in the UK, excluding Scotland, at 10 per cent for standard rate taxpayers and 20 per cent for higher rate taxpayers, the exemption figure has increased from £11,300 to £11,700.
Both UK and Scottish changes are set to take place on 6 April 2018. If you feel that you may be affected by any of the above changes, get in touch. Our specialist tax accounts will be able to quickly answer any of your questions.