Tax Allowances and Rates for the Year 2018-19

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Tax Allowances and Rates for the Year 2018-19

April 5th marked the end of the financial year. Now we’re into the new financial year, it’s vital that you as an employer or employee are aware of the tax allowances and rates for the year 2018/19 financial year.

Everyone has to pay their taxes and knowing where you stand with taxes is important. The rates, however, change from year to year.

In the UK we have many different tax rates. This affects both individuals and businesses. But no matter how big your business, you will need to pay your taxes.

Let’s get started and take a look at the new tax allowances and rates for the next financial year.


Personal & Company Tax Rates 2018/2019

Income Tax Allowances

The way in which we’ll review the income tax allowances for the 2018/19 tax year is by comparing it to the previous year. This will allow us to grasp the changes and represent their effect on employers and employees.


Personal Allowance

Personal allowance is the amount of salary you can take home tax-free every year. In 2017/18, the figure stood at £11,500. In 2018/19, it has risen to £11,850. The income limit (the level of earnings at which the personal allowance reduces) remained at 100,000.


Income Tax

Income tax is split into three rates; basic rate, higher rate and additional rate. Basic is the lowers level of income tax whilst additional is the top rate of tax.

The basic rate: 2017/18 – 20% on earnings above the Personal Allowance up to £33,500. 2018/19 – 20% on earnings above the Personal Allowance up to £34,500.

Higher rate: 2017/18 – 40% on earnings above the basic to £150,000. This remained the same for the 2018/19 year.

Additional rate: 45% on earnings above £150,000. This remained the same for this tax year.


The Scottish Tax Bands are very different:

(Scottish Bands) – (Band Name) – (Rate)

Over £11,851 – £13,850 – Starter – 19%
Over £13,851 – £24,000 – Basic – 20%
Over £24,001 – £43,430 – Intermediate – 21%
Over £43,431 – £150,000 – Higher – 41%
Above £150,000 – Top – 46%


National Insurance

It’s no secret National Insurance bands and rates are one of the most confusing aspects of tax. The main issue being that it’s different for employees, limited company directors and sole traders.


National Insurance Contributions 2018/19

Class 1 (earnings-related)
Employees’ weekly earnings
First £162 – Nil
£162.01-£892 – 12%
Over £892 – additional 2%

Employers’ weekly earnings
First £162 – Nil
Over £162 – 13.8%


Self-employed National Insurance contributions

Small profit threshold: 17/18 – £6,025 p/y | 18/19 – £6,205 p/y
Lower profits limit: 17/18 – £8,164 p/y | 18/19 £8,424 p/y
Higher profit: 17/18 – above £45’000 – 2% | 18/19 – above £46’350 – 2%


Company Tax Rates

Corporation Tax

Corporation tax will remain at 19% for both the small profits rate (profits of up to £300,000) and main rate (profits above £300,000).


VAT Registration

The VAT Registration threshold (the level of revenue at which you must register for VAT) remained at £85,000.


General VAT Rates

The general VAT rates will remain the same. This includes the standard rate being 20%, a reduced rate being 5% and zero rate being 0%.


If you still have questions, please do get in touch

Tax can be a real minefield. Although this blog contains valuable information, it’s completely understandable that you may still have questions.

We’d be more than happy to help give you the answers you need. If you would like to get in touch with us, then please do so using either of the contact methods below:

Tel: 01204 328761


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