Income tax

6 April 2018 sees increases to the basic and higher rate income tax bands for England, Wales and Northern Ireland. The income tax personal allowance will rise from £11,500 to £11,850. The income tax rates and bands applying from 6 April 2018 are outlined below:

Band (£) Rate (%)
0 - 34,500 20
34,501 - 150,000 40
Over 150,000 45

Savings income

Starting rate for savings 0%
Starting rate limit for savings £5,000

Not available if the taxable non-savings income exceeds the starting rate band. £1,000 of savings income for basic rate taxpayers (£500 for higher rate) may be tax-free.

Dividend income

Dividend ordinary rate 7.5%
Dividend upper rate 32.5%
Dividend additional rate 38.1%

The first £2,000 of dividends are tax-free.

All change for Scotland

In the 2018/19 Scottish Draft Budget, Derek Mackay, Finance Secretary for Scotland, announced a series of changes to Scottish income tax, including new income tax rates, taking the possible income tax rates payable up to five. The new Scottish income tax rates and bands for 2018/19, applicable to non-savings and non-dividend income, are:

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 taxpayers residing in Wales.

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