A number of other key changes are coming into effect during 2018, which may have an impact on your business and personal finances.
Dividend Allowance set to reduce
The Dividend Allowance is set to be reduced from £5,000 to £2,000 from 6 April 2018, just two years after it was first introduced. The stated aim of the move is to ‘address the unfairness’ around the director-shareholders’ tax advantage, as well as what the Chancellor described as the ‘extremely generous tax break for investors with substantial share portfolios’.
Changes to car fuel benefit rates
From April 2018 the benefit-in-kind rates for cars will increase significantly, with further rises planned in 2019 and 2020. The increases are likely to result in cost rises for employers providing company cars to their employees.
In addition, from 6 April 2018, the taxable diesel car benefit for diesel cars will rise from 3% to 4%, although the maximum fuel rate remains at 37% (unless the car is registered on or after 1 September 2017 and meets the Euro 6d emissions standard).
Compulsory employer pension contributions to rise
The pensions auto-enrolment legislation currently requires employers to contribute at least 1% on the qualifying pensionable earnings for eligible jobholders. From 6 April 2018 this will rise to 2%, with a further rise to 3% planned in April 2019.
Residence Nil-Rate Band rises
The inheritance tax Residence Nil-Rate Band (RNRB), introduced in April 2017, will rise from £100,000 in 2017/18 to £125,000 for the 2018/19 tax year. The RNRB is designed to enable a ‘family home’ to be passed wholly or partially tax-free on death to direct descendants such as children or grandchildren. It will continue to increase in increments to reach £175,000 in 2020/21.
The new General Data Protection Regulation
The new General Data Protection Regulation (GDPR) is set to come into effect on 25 May 2018, and will require all organisations that deal with individuals living in an EU member state to protect the personal information belonging to those individuals, and have verified proof of such protection. With financial penalties for non-compliance of up to €20 million or 4% of total annual worldwide revenue, businesses are being urged to make sure they are prepared for the regulations.