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Introduction
Alongside the wider challenges facing the economy, the UK tax system is also undergoing significant changes,
with the devolution of income tax and stamp duty powers to Scotland and Wales continuing apace. Meanwhile,
HMRC is continuing its drive towards a fully digital tax system, via its flagship Making Tax Digital regime. Here
we provide an overview of these latest developments.
Changes to income tax
In the 2018/19 Scottish Budget, the Finance Secretary for
Scotland announced a raft of additional changes for Scottish
resident taxpayers, including new income tax rates, taking
the possible income tax rates payable up to five. For 2018/19
the tax rates and bands applicable to Scottish taxpayers on
non-savings and non-dividend income are set as follows:
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 Welsh taxpayers.
The new stamp duty regime
The stamp duty regime has also seen a number of significant
changes in recent times, and further measures take effect for
the 2018/19 tax year. From 22 November 2017, most first-time
buyers in England, Wales and Northern Ireland paying £300,000
or less for a residential property no longer pay Stamp Duty
Land Tax (SDLT), while those paying between £300,000 and
£500,000 pay SDLT at 5% on any purchase amount in excess of
£300,000.
From 1 April 2018, Wales rolls out its own stamp duty
equivalent, the Land Transaction Tax (LTT), which preserves
the essential structure of SDLT but with some key differences,
including a higher starting threshold for residential properties.
Wales has no plans to introduce a relief for first-time buyers. The
new LTT rates are as follows:
Residential
£
Rate
%
Non-residential
£
Rate
%
Up to 180,000
0
Up to 150,000
0
180,001 - 250,000 3.5 150,001 - 250,000 1
250
,001 - 400,000 5 250
,001 - 1,000,000 5
400,001 - 750,000 7.5
Over 1,000,000
6
750
,001 - 1,500,000 10
Over 1,500,000
12
Scotland already has its own equivalent of SDLT, the Land
and Buildings Transaction Tax (LBTT). In the Scottish Budget,
Finance Secretary Derek Mackay confirmed that the LBTT rates
will remain unchanged for 2018/19, although a new relief for
first-time homebuyers is planned.
Making Tax Digital: a look ahead
HMRC is phasing in its landmark Making Tax Digital (MTD)
initiative, which will see a fundamental change to the way in
which businesses keep records and report to HMRC, and will
ultimately require businesses and individuals to register, file, pay
and update their information via a secure online tax account.
The new system was originally intended to be implemented
between 2018 and 2020. However, following concerns raised by
business and industry experts, the government has put forward
a revised timescale for its introduction.
Under the new timetable, with effect from 1 April 2019
businesses with a turnover above the VAT threshold
(currently
£85,000) must keep digital records for VAT purposes and
provide their VAT return information to HMRC using MTD
functional compatible software.
Keeping digital records and making quarterly updates will not be
mandatory for taxes other than VAT before April 2020, although
businesses below the VAT threshold which have voluntarily
registered for VAT can opt to join the scheme.
MTD will ultimately affect all businesses, regardless of
their size. As your advisers, we are carefully monitoring the
latest developments and we can help you to prepare for the
new system.
Your financial planning strategy
In the face of ongoing change, it is more important than ever to
have in place a robust business and personal financial planning
strategy, to help ensure that you and your family are financially
secure and on course to achieve your long-term goals.
We can help with all of your business and personal tax and
financial planning needs. For a strategic review of your finances,
please contact us.