The Autumn Budget 2018 Reaction: Personal Taxes

A number of announcements have been made by the chancellor in respect of personal taxes, the National Living Wage, benefits and duties.

– The Personal Allowance will increase to £12,500 in April 2019 (currently £11,850), with the higher rate threshold increasing to £50,000 (currently £46,350), which is a year earlier than the Conservatives pledged in their election manifesto. These amounts will remain the same in 2020/21 and increase by the Consumer Price Index (CPI) from 2021/22.

– The National Living Wage for those aged 25 and over will increase to £8.21 per hour in April 2019 (from £7.83). Increases for younger employees will also be implemented at the same time.

– The Universal Credit (UC) Work Allowances will be increased by £1,000 from April 2019 to ensure that it pays to work. This is part of the transition from the old benefit systems on to the UC.

– Fuel duty has been frozen for the 9th year in a row along with beer, cider and spirit duties.

‘IR35’ – Off-payroll working

The changes which we have seen implemented in the public sector will be extended to the private sector from April 2020. The rules will require the engaging company (i.e. the end client) to assess whether PAYE and Class 1 National Insurance Contributions should be applied to contractors who are working through their own limited company.

The measures should ensure that those individuals working in the same way pay broadly the same amount of Income Tax and National Insurance Contributions, even though one of them works through a company.

These new rules will be implemented in April 2020 and will only apply to large and medium-sized organisations, and it is their responsibility to assess whether the rules apply to each individual engagement.