Budget 2018: What you need to know
MoneyPlus Features Team | October 29, 2018
Time to read: 3 minutes
Savings, pensions and tax news from the Budget, 29 October 2018.
- The Chancellor announced increases to the personal tax-free allowance and the higher-rate tax threshold
- Pensions: the Lifetime Allowance is increasing to £1.055m
- ISA savings for children: the Junior ISA allowance is increasing to £4,368
- Stamp duty abolished for more first-time buyers.
While this year’s Budget was a fairly quiet one, the Chancellor made a number of announcements affecting tax and savings. Here are some of the highlights.
The personal tax-free allowance is going up
The personal allowance – how much you earn before you need to start paying income tax – will increase by £650 in April 2019, to £12,500.
Higher-rate income tax threshold to rise to £50k
The earnings threshold at which you’d need to pay the higher rate of tax (currently 40%) is going up to £50,000, from £46,351.
Both changes come into effect from 6 April 2019, a year earlier than planned. The Treasury estimates that around 32 million people will benefit as a result.
Jamie Jenkins, Head of Global Savings Policy at Standard Life Aberdeen, is positive about the personal allowance target of £12,500 and higher rate tax threshold of £50,000 being brought forward to April 2019. “That will make a real difference to people’s take-home pay.”
Be aware that tax rates and bands in Scotland may differ. (You can read more at Gov.uk.)
Pensions tax relief – no change
There were no changes to pensions tax relief rates and allowances, which is good news for those saving into a pension.
The Lifetime Allowance
As announced earlier, the Lifetime Allowance is due to rise by 2.4 per cent to £1,055,000 in 2019 in line with September’s consumer price index (CPI) inflation figure, which is good news for pension savers.
The Lifetime Allowance is the maximum you normally can save over the lifetime of your pension pot without paying extra tax.
ISA (Individual Savings Account) allowances for 2019-2020
ISAs are a tax-efficient way to save, so it’s good news that the Junior Isa allowance will get an inflationary increase from April 2019 to £4,368.
There’s no change to the adult ISA limit, which stays at £20,000.
Home owners: stamp duty abolished for more first-time buyers
First-time buyers of shared ownership properties of up to £500,000 no longer have to pay stamp duty, in a move which will help more people get on the housing ladder.
The stamp duty cut is being applied retrospectively to 22 November 2017, so anyone who is eligible will be able to claim a refund.
This applies to England and Northern Ireland.
Capital gains tax allowance up
The capital gains tax allowance will increase by £300 to £12,000 from April 2019.
And that’s it for Budget 2018 for now.
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The information here should not be regarded as financial advice and is based on our understanding of today’s Budget, in October 2018.
Your own circumstances will have an impact on tax, and tax and legislation may change. A pension and some types of ISA are an investment and their value can go down as well as up and may be worth less than was paid in.
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