Personal Allowances, Rate Thresholds & The National Minimum Wage
From April 2018 the tax free personal allowance will rise with inflation to £11,850, from the current level of £11,500, saving the average tax payer £70 or £140 for a higher rate tax payer.
This new increase in the personal allowance means that since 2011, the amount you can earn tax-free has risen by £5,375, saving the average worker £1,075 in tax.
In addition to raising the personal allowance, the higher rate – the point at which you start paying 40% tax – will be raised from £45,000 to £46,350. For somebody earning £50,000 a year, this will give them an extra £270 a year (on top of the extra £140).
From April 2018, the national living wage for those over 25 will increase from £7.50 to £7.83, with over 2 million workers expected to benefit. For a full time worker, this is expected to net an average increase in pay of £600 per year.
Increases in the National Minimum Wage will also apply to the following age brackets:
| 21 - 24 | 18 - 20 | 16 - 17 | Apprentices |
| £7.38 per hour | £5.90 per hour | £4.20 per hour | £3.70 per hour |
Failure to apply the new minimum wage to your employees can be met with a hefty fine, therefore please ensure that your payroll records are updated next April.
The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.
Ellie Hammett FCCA
Manager
Ellie started with Evolution ABS in April 2010 and became a fully qualified as a Chartered Certified accountant in December 2015. She focuses on a portfolio of a range of clients, from farming to plumbing, providing valuable support in all aspects of accountancy and taxation.
Having grown up on a dairy farm in Dorset, Ellie later moved to Devon in 1998. She now lives with her husband and two young sons on their family farm in East Devon, where they raise beef, sheep, and grow arable crops. When she gets the chance, Ellie enjoys being outdoors with her boys, who share their dad’s passion for farming. She also enjoys moments spent with family and friends and the occasional bit of retail therapy when time allows!
Ellie can be contacted in the office on Mondays – Thursdays.