Tax and financial strategies 2018/19

From April 2019, the National Assembly for Wales has the right to vary the rates of income tax payable by Welsh taxpayers.

Relintegral have a wealth of experience in advising businesses and individuals in the London area on a range of key tax and financial planning issues. Here we consider strategies to help you to minimise your tax bill, maximise your profitability and boost your wealth.

Alongside the wider challenges facing the economy, the UK tax system is also undergoing significant changes, with the devolution of income tax and stamp duty powers to Scotland and Wales continuing apace. Meanwhile, HMRC is continuing its drive towards a fully digital tax system, via its flagship Making Tax Digital regime. Here we provide an overview of these latest developments.

Changes to income tax

In the 2018/19 Scottish Budget, the Finance Secretary for Scotland announced a raft of additional changes for Scottish resident taxpayers, including new income tax rates, taking the possible income tax rates payable up to five. For 2018/19 the tax rates and bands applicable to Scottish taxpayers on non-savings and non-dividend income are set as follows:

Band (£) Band name Rate (%)
0-2,000 Starter 19
2,001-12,150 Basic 20
12,151-31,580 Intermediate 21
31,581-150,000 Higher 41
Over 150,000 Top 46

From April 2019, the National Assembly for Wales has the right to vary the rates of income tax payable by Welsh taxpayers.

The new stamp duty regime

The stamp duty regime has also seen a number of significant changes in recent times, and further measures take effect for the 2018/19 tax year. From 22 November 2017, most first-time buyers in England, Wales and Northern Ireland paying £300,000 or less for a residential property no longer pay Stamp Duty Land Tax (SDLT), while those paying between £300,000 and £500,000 pay SDLT at 5% on any purchase amount in excess of £300,000.

From 1 April 2018, Wales rolls out its own stamp duty equivalent, the Land Transaction Tax (LTT), which preserves the essential structure of SDLT but with some key differences, including a higher starting threshold for residential properties. Wales has no plans to introduce a relief for first-time buyers. The new LTT rates are as follows:

Residential (£) Rate (%)
0 – 180,000 0
180,001 – 250,000 3.5
250,001 – 400,000 5
400,001 – 750,000 7.5
750,001 – 1,500,000 10
Over 1,500,000 12
Non-residential (£) Rate (%)
0 – 150,000 0
150,001 – 250,000 1
250,001 – 1,000,000 5
Over 1,000,000 6

Scotland already has its own equivalent of SDLT, the Land and Buildings Transaction Tax (LBTT). In the Scottish Budget, Finance Secretary Derek Mackay confirmed that the LBTT rates will remain unchanged for 2018/19, although a new relief for first-time homebuyers is planned.

Making Tax Digital: a look ahead

HMRC is phasing in its landmark Making Tax Digital (MTD) initiative, which will see a fundamental change to the way in which businesses keep records and report to HMRC, and will ultimately require businesses and individuals to register, file, pay and update their information via a secure online tax account.

The new system was originally intended to be implemented between 2018 and 2020. However, following concerns raised by business and industry experts, the government has put forward a revised timescale for its introduction.

Under the new timetable, with effect from 1 April 2019 businesses with a turnover above the VAT threshold (currently £85,000) must keep digital records for VAT purposes and provide their VAT return information to HMRC using MTD functional compatible software.

Keeping digital records and making quarterly updates will not be mandatory for taxes other than VAT before April 2020, although businesses below the VAT threshold which have voluntarily registered for VAT can opt to join the scheme.

MTD will ultimately affect all businesses, regardless of their size. As your advisers, we are carefully monitoring the latest developments and we can help you to prepare for the new system.

Your financial planning strategy

In the face of ongoing change, it is more important than ever to have in place a robust business and personal financial planning strategy, to help ensure that you and your family are financially secure and on course to achieve your long-term goals.