Increase in Personal Tax Allowances
When the budget statement was delivered at the end of October 2018 the main headline was the increase in personal tax allowances happening one year early. Higher tax allowances mean slightly more income is received tax free and it is that tax free amount which gives a saving. For someone earning below £46,384 this tax saving will be £130 per annum and for or those earning between £50,000 and £100,000 the saving will be £860 per annum, all thanks to the increases in personal allowances and the tax rate band threshold changes. The starting rate of tax for savings income remains at £5,000 and applies to the whole of the UK.
The Welsh Assembly published its Budget on 2nd October 2018. HM Revenue and Customs (HMRC) will continue to manage and collect income tax and manage personal allowances, National Insurance benefits and Gift Aid, with the Welsh Revenue Authority (WRA), created in 2017, managing and collecting Welsh Taxes.
From 6th April 2019 the rate of income tax paid by Welsh residents to HMRC will be reduced across each rate of income tax (the basic, higher and additional rates) by 10 percent. The WRA will then charge income tax on Welsh residents at a rate of 10 percent resulting in there being no financial difference for the first year in the transitional period.
It is less certain how the Scottish Parliament will set allowances and rate bands for Scottish residents. We will have to wait for the Scottish budget on 13th December to see the impact on Scottish residents, however the Budget 2018 did confirm that a new allowance introduced only for people in Scotland who get carers allowance, would be subject to income tax. The Carers Allowance Supplement is £221 and this is paid twice a year by Social Security Scotland.