24 Apr 24.04.2018 New tax year 2018
24.04.2018 New tax year 2018
The new tax year started on 6 April, this means that a range of policy changes will follow. While drivers, graduates and minimum wage workers will benefit from the new policies, shareholders, benefit claimers and higher earners in Scotland will end up losing out.
Minimum wage workers
Minimum wage workers will get above-inflation pay rises. Those between the ages of 18 and 20 will get a 5.4% increase in pay, their hourly rate will increase from £5.60 to £5.90.
Minimum wage workers above the age of 25, who are on the national living wage, will see their pay increase by 4.4%. The Low Pay Commission was instructed to make sure that the national living wage reaches 60% of average earnings by 2020. The national living wage is projected to hit £8.62 by the end of the decade.
At the autumn Budget, Philip Hammond froze fuel duty for the 7th consecutive year, meaning the inflation rate levied on petrol and diesel will remain at 57.95p per litre. Due to the fact that VAT is applied after fuel duty, the freeze in fuel duty saves drivers a further 0.72 p per litre in VAT. The Treasury has estimated that the duty freeze will save the average driver £160 per year.
University graduates in England and Wales who started their courses in September 2012 or after will not need to begin repaying their student loans until they earn at least £25,000.
Wealthy Scottish people
The Scottish parliament is planning to introduce additional tax and three new thresholds in order to make the Scottish tax system more progressive, resulting in bigger payments from high earners.
The basic tax year in Scotland will be 19% and the highest rate of tax will be 46%. The new rates will add additional complexity to the tax system, especially in relation to the marriage allowance, a scheme that permits basic rate taxpayers claim some of a non-working spouses’ tax free allowance.
The tax-free dividend allowance — the amount shareholders receive in dividends before having to pay income tax— will fall from £5,000 to £2,000 in the new tax year.
Working-age benefit claimants
People on benefits are going to be at disadvantage, as working-age benefits remain frozen, costing the average household £450 by 2020. The freeze affects income support, housing benefits, child tax credits, employment and support allowance, jobseeker’s allowance, universal credit, child benefits and working tax credits.