Facts About the New Tax Year 2018/19

The new Tax Year for 2018/19 is starting and we’ve got some facts on the new changes that you need to know about.

  • Employer Pension Contributions

Under auto enrolment legislation, minimum pension contributions are required to increase over time.  This happens on set dates.  Originally, auto enrolment minimum contributions were due to rise in October 2017 and again in October 2018.

These increases were pushed back by six months by the government and the increases will now happen on the 6 April 2018 to a total of 5% of qualifying earnings of which 2% must be paid by the employer and 6 April 2019 to a total of 8% of qualifying earnings of which 3% must be paid by the employer.

 Date  Employer minimum contribution  

Total minimum contribution

 

 

Before 5 April 2018

 

1%

 

2% (including 1% staff contribution)

 

6 April 2018 – 5 April 2019

 

2%

 

5% (including 3% staff contribution)

 

6 April 2019 onwards

 

3%

 

8% (including 5% staff contribution)

 

You can increase your personal pension contributions at any time, by paying additional – voluntary contributions.

  • Student Loans

Student loan minimum repayments are changing as 6th April 2018. The threshold for Plan 1 students (those who took out a loan before 1st September 2012) rises to £18,330 and the threshold for Plan 2 students (those who took out loans on or after 1st September 2012) is rising to £25,000.

  • National Minimum Wage

The national minimum wage increase will be coming into effect on the first pay period to begin on or after 1st April. The new rates are below:

Age  

 

Current Rate

 

 

 

New Rates effective from 1st April 2018

 25 and over  £7.50  

£7.83

 

21 to 24 £7.05  

£7.38

 

18 to 20 £5.60  

£5.90

 

Under 18 £4.05  

£4.20

 

 

  • Childcare vouchers

Childcare voucher schemes that are provided by the employer should be closing to new entrants on 6th April 2018. However, an employee might be able to join an employer’s childcare vouchers scheme just before April 2018, if a salary sacrifice is made.

  • Tax Free Childcare

Employees should let their employer know within 90 days if they have opened a tax free childcare account so that their employer can stop providing childcare vouchers to that particular employee. If an employee is receiving childcare support direct from the government via a tax-free childcare account, as well as receiving employer-provided childcare vouchers or even directly contracted childcare, this would be a matter for HMRC, not the employer.

  • New Tax Rates

There are a number of new tax rates which have been put in place for the year 2018/19. A summary of these new rates can be seen here.

 

If you have any questions on the above or simply need more information, contact K.A. Farr & Co. by calling 01704 211 434 or fill in our online contact form.