Yes it’s been covered everywhere but here is a summary of the things you really need to know about the Budget 2018 from a financial planning point of view.
Who does this affect: Everyone
- The Personal Allowance – the amount of money we can earn from employment or pensions and investments before being taxed – is rising from £11,850 to £12,500 from April 2019.
- The earnings point at which you start paying higher rate Income Tax is also rising from £46,350 to £50,000 from April 2019.
- This means an extra £130 a year in your pocket if you are a basic rate tax payer and £860 if you are a higher rate tax payer.
Capital Gains Tax
Who does this affect: Home owners with multiple properties.
- You may pay Capital Gains Tax (CGT) if you sell a property you don’t live in as your main home.
- Currently you can avoid or reduce a CGT bill if you sell a property you have lived in for some time using Private Residence Relief (PPR).
- As well as other periods of ownership the last 18 months are currently exempt from CGT via PPR.
- From 2020 this period will be cut to the last 9 months.
- Also, if you have let out your home before you sell it you currently qualify for Lettings Relief of up to £40,000 off the gain subject to CGT on sale.
- From 2020 Lettings Relief will only be available if you share and live in the property with a tenant.
Who does this affect: Business owners who may be looking to sell in the future
- When you sell a business you may pay a Capital Gains Tax charge on the sale proceeds.
- Currently, Entrepreneurs Relief allows business owners who sell their business to claim a reduced 10% Capital Gains Tax charge rather than the standard Capital Gains Tax rate.
- You currently have to own the business for 12 months before selling in order to qualify.
- From April 2019 you will need to have owned the business asset for 2 years.
So apart from a nice little reduction in Income Tax for most of us there is nothing much to shout about in the Budget 2018.
There’s some bad news if you like a drop of wine though. Whilst tax duty on beers and spirits will be frozen, the duty on wine will increase early next year!
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.