Budget 2018 tax tables: what the government’s changes mean for you
Accountants Blick Rothenberg crunch the numbers to calculate the winners and losers from the Budget
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Your support makes all the difference.The winners in this Budget are readily identifiable. First: middle and high earners. Those earning less than £100,000 will benefit from a higher personal allowance of £12,500 and increased basic rate tax band of £37,500 – and so will not pay 40% tax until earnings reach £50,000. An individual basic rate taxpayer will be £130 better off as a result of the higher personal allowance.
Entrepreneurs will also gain. Despite calls from some quarters to abolish the £10m entrepreneurs’ relief allowance, the chancellor decided to revise the provision to increase the minimum holding period from one year to two years. The increased timeframe is unlikely to affect many, as most entrepreneurs recognise that it takes more than two years to establish a successful business that they will sell.
Businesses generally could gain. There was speculation that the proposed corporation tax cut to 17 per cent from 1 April 2020 could be scrapped – but this has remained. In addition, businesses will benefit from a temporary increased “Annual Investment Allowance” of £1m (from the current £200,000), which provides a full deduction on capital expenditure.
As for losers, let’s take top earners. When someone earns more than £100,000 of income, they start to lose their personal allowance by £1 for every £2 of income they earn over this threshold. This creates an effective rate of tax of 60 per cent. The increase in the personal allowance means the 60 per cent effective rate of tax remains in effect for longer than before – between £100,000 and £125,000. However, because the chancellor, unexpectedly, left tax relief on pensions contributions alone, someone in this position could make a substantial contribution to their pension pot to bring themselves back under the £100,000 mark (if they have the scope to do so under the pension relief rules).
Then there are homeowners. The chancellor has proposed two new changes to main residence relief, when selling your home. The main proposed change is to shorten the current 18-month exemption to nine months, meaning a shorter period for people to move house and not be subject to capital gains tax. The second proposed change effectively relates to abolishing the £40,000 “lettings relief”, which applies when someone lets out their home. “Lettings relief” can be worth up to £11,200 in Capital Gains Tax.
Last, in contrast to beer, sprits and cider drinkers – wine connoisseurs. While duty rates on beer and spirits will be frozen, the duty on wine will increase in line with inflation. Those who enjoy a glass of their favourite red should do so before 1 February 2019, when the higher duty applies (but they should drink responsibly of course).
Nimesh Shah is a partner at Blick Rothenberg, leading accounting, tax and advisory specialists
Married (or civil partnership) couple, two earners, two children
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 21,206 | 21,206 | +0 |
| £15,000 | 23,967 | 23,980 | +1 |
| £20,000 | 26,457 | 26,529 | +6 |
| £25,000 | 28,340 | 28,422 | +7 |
| £30,000 | 30,035 | 30,119 | +7 |
| £35,000 | 32,314 | 32,420 | +9 |
| £40,000 | 35,751 | 35,870 | +10 |
| £45,000 | 39,151 | 39,270 | +10 |
| £50,000 | 42,551 | 42,670 | +10 |
| £60,000 | 49,351 | 49,470 | +10 |
| £70,000 | 56,119 | 56,323 | +17 |
| £80,000 | 61,656 | 61,860 | +17 |
| £90,000 | 66,597 | 66,800 | +17 |
| £100,000 | 72,730 | 72,934 | +17 |
| £125,000 | 88,063 | 88,267 | +17 |
| £150,000 | 103,032 | 103,308 | +23 |
| £175,000 | 114,198 | 114,472 | +23 |
Married (or civil partner) couple, one earner, two children
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 21,017 | 21,042 | +2 |
| £15,000 | 22,974 | 23,142 | +14 |
| £20,000 | 24,324 | 24,492 | +14 |
| £25,000 | 25,674 | 25,842 | +14 |
| £30,000 | 27,024 | 27,192 | +14 |
| £35,000 | 29,207 | 29,375 | +14 |
| £40,000 | 32,607 | 32,775 | +14 |
| £45,000 | 35,770 | 36,175 | +14 |
| £50,000 | 38,805 | 39,325 | +43 |
| £60,000 | 42,816 | 43,336 | +43 |
| £70,000 | 48,616 | 49,136 | +43 |
| £80,000 | 54,416 | 54,936 | +43 |
| £90,000 | 60,216 | 60,736 | +43 |
| £100,000 | 66,016 | 66,536 | +43 |
| £125,000 | 75,776 | 76,036 | +22 |
| £150,000 | 90,276 | 90,536 | +22 |
| £175,000 | 103,526 | 103,786 | +22 |
Married pensioners (born after 5th April 1935)
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 10,000 | 10,000 | +0 |
| £15,000 | 15,000 | 15,000 | +0 |
| £20,000 | 19,940 | 20,083 | +12 |
| £25,000 | 24,274 | 24,417 | +12 |
| £30,000 | 28,607 | 28,750 | +12 |
| £35,000 | 32,703 | 32,833 | +11 |
| £40,000 | 36,740 | 37,000 | +22 |
| £45,000 | 40,740 | 41,000 | +22 |
| £50,000 | 44,740 | 45,000 | +22 |
| £60,000 | 52,740 | 53,000 | +22 |
| £70,000 | 60,667 | 61,000 | +27 |
| £80,000 | 67,343 | 68,333 | +83 |
| £90,000 | 74,010 | 75,000 | +83 |
| £100,000 | 80,677 | 81,667 | +83 |
| £125,000 | 97,343 | 98,333 | +83 |
| £150,000 | 113,280 | 115,000 | +143 |
| £175,000 | 124,947 | 126,667 | +143 |
Single pensioner
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 10,000 | 10,000 | +0 |
| £15,000 | 14,370 | 14,500 | +11 |
| £20,000 | 18,370 | 18,500 | +11 |
| £25,000 | 22,370 | 22,500 | +11 |
| £30,000 | 26,370 | 26,500 | +11 |
| £35,000 | 30,300 | 30,500 | +11 |
| £40,000 | 34,370 | 34,500 | +11 |
| £45,000 | 38,370 | 38,500 | +11 |
| £50,000 | 41,640 | 42,500 | +72 |
| £60,000 | 47,640 | 48,500 | +72 |
| £70,000 | 53,640 | 54,500 | +72 |
| £80,000 | 59,640 | 60,500 | +72 |
| £90,000 | 65,640 | 66,500 | +72 |
| £100,000 | 71,640 | 72,500 | +72 |
| £125,000 | 81,900 | 82,500 | +50 |
| £150,000 | 96,900 | 97,500 | +50 |
| £175,000 | 110,650 | 111,250 | +50 |
Single person, no children
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 11,113 | 11,138 | +2 |
| £15,000 | 13,581 | 13,736 | +13 |
| £20,000 | 16,981 | 17,136 | +13 |
| £25,000 | 20,381 | 20,536 | +13 |
| £30,000 | 23,781 | 23,936 | +13 |
| £35,000 | 27,181 | 27,336 | +13 |
| £40,000 | 30,581 | 30,736 | +13 |
| £45,000 | 33,981 | 34,136 | +13 |
| £50,000 | 37,016 | 37,536 | +43 |
| £60,000 | 42,816 | 43,336 | +43 |
| £70,000 | 48,616 | 49,136 | +43 |
| £80,000 | 54,416 | 54,936 | +43 |
| £90,000 | 60,216 | 60,736 | +43 |
| £100,000 | 66,016 | 66,536 | +43 |
| £125,000 | 75,776 | 76,036 | +22 |
| £150,000 | 90,276 | 90,536 | +22 |
| £175,000 | 103,526 | 103,786 | +22 |
Single person, one child
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 17,524 | 17,549 | +2 |
| £15,000 | 19,244 | 19,399 | +13 |
| £20,000 | 20,594 | 20,749 | +5 |
| £25,000 | 21,944 | 22,099 | +5 |
| £30,000 | 24,857 | 25,097 | +5 |
| £35,000 | 28,257 | 28,412 | +5 |
| £40,000 | 31,657 | 31,812 | +5 |
| £45,000 | 35,057 | 35,212 | +5 |
| £50,000 | 38,092 | 38,612 | +43 |
| £60,000 | 42,816 | 43,336 | +43 |
| £70,000 | 48,616 | 49,136 | +43 |
| £80,000 | 54,416 | 54,936 | +43 |
| £90,000 | 60,216 | 60,736 | +43 |
| £100,000 | 66,016 | 66,536 | +43 |
| £125,000 | 75,776 | 76,036 | +22 |
| £150,000 | 90,276 | 90,536 | +22 |
| £175,000 | 103,526 | 103,786 | +22 |
Single person, self-employed
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 11,007 | 11,023 | +1 |
| £15,000 | 13,625 | 13,771 | +12 |
| £20,000 | 17,175 | 17,321 | +12 |
| £25,000 | 20,725 | 20,871 | +12 |
| £30,000 | 24,275 | 24,421 | +12 |
| £35,000 | 27,825 | 27,971 | +12 |
| £40,000 | 31,375 | 31,521 | +12 |
| £45,000 | 34,925 | 35,071 | +12 |
| £50,000 | 38,000 | 38,621 | +52 |
| £60,000 | 43,800 | 44,421 | +52 |
| £70,000 | 49,600 | 50,221 | +52 |
| £80,000 | 55,400 | 56,021 | +52 |
| £90,000 | 61,200 | 60,821 | +52 |
| £100,000 | 67,000 | 67,621 | +52 |
| £125,000 | 76,760 | 77,121 | +30 |
| £150,000 | 91,260 | 91,621 | +30 |
| £175,000 | 104,510 | 104,871 | +30 |
Unmarried couple, both earning
| Salary | Net Income 2018/2019 | Net Income 2019/2020 | Monthly gain/loss 2019/2020 |
|---|---|---|---|
| £10,000 | 11,302 | 11,302 | +0 |
| £15,000 | 14,811 | 14,836 | +2 |
| £20,000 | 19,114 | 19,269 | +13 |
| £25,000 | 23,047 | 23,202 | +13 |
| £30,000 | 26,792 | 26,972 | +15 |
| £35,000 | 30,525 | 30,705 | +15 |
| £40,000 | 33,962 | 34,272 | +26 |
| £45,000 | 37,362 | 37,672 | +26 |
| £50,000 | 40,762 | 41,702 | +26 |
| £60,000 | 47,562 | 47,872 | +26 |
| £70,000 | 54,330 | 54,672 | +28 |
| £80,000 | 60,463 | 61,138 | +56 |
| £90,000 | 66,597 | 67,272 | +56 |
| £100,000 | 72,730 | 73,405 | +56 |
| £125,000 | 88,063 | 88,738 | +56 |
| £150,000 | 103,032 | 104,072 | +87 |
| £175,000 | 113,726 | 115,238 | +87 |
Tables compiled by Paul Haywood-Schiefer ATT at Blick Rothenberg LLP
*Data assumes: where both members of a couple are earning, the income is split two thirds to one third; all earners work 30+ hours; no investment income received; all children under 16; tables include tax credits (working and child tax credits and child benefit where applicable; no pension contributions or gift aid payments; tables do not include blind person’s allowance; transferable allowance only available to married couples and civil partners who are not in receipt of married couple’s allowance, and only where a spouse or civil partner has not used all of their personal allowance and their partner is not a higher or additional rate taxpayer
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