This is a summary of the Capital Gains Tax Allowance for 2018/19.
Capital Gains Tax (CGT) is payable when you sell something and make a profit on it as well as when you give something away that would otherwise be included in CGT.
Some things are not liable for CGT however and you should check the rules with HMRC for your individual circumstances.
The amount of CGT that is due depends on the profit you make (i.e. the amount you sell it for less the amount you paid for it) and is only payable if it exceeds the CGT allowance for the tax year in which you make the gain.
The CGT Allowance for 2018/19 is £11,700.
This amount has been increased from 2017/18 when the rate was £11,300.
Examples of when Capital Gains Tax is due could be:
On the sale of a second property
On the disposal of personal assets that are worth more than £6,000 (although this does not include your car)
On the sale of shares (that are not held in an ISA)
Obviously if your profits from selling these types of goods/assets is below the allowance then no tax is payable.
If you have the tax code letter M or N after the number in your tax code notification then these two letters are linked as it means that you have either transferred or have received a transfer of the 10% personal allowance to/from your partner.
The marriage transfer allowance was introduced so that those who did not pay tax on their earnings up to the full personal allowance, could transfer 10% of their allowance to their partner (as long as their partner was only paying basic rate tax).
So, for example if your tax code is 1265M that means that your partner has transferred 10% of their personal allowance to you (amounting to £1,150) and this is added on to your personal allowance of £11,500, giving you a total personal allowance of £12,650.
Conversely, if your tax code is 1035N then that is likely to be because you have volunteered to give up 10% of your personal allowance to transfer over to your partner who can make use of it. This is worked out by taking £1,150 away from £11,500, thus giving you a personal allowance of £10,350.
(The above figures are based on amounts for the 2017/18 tax year.)
If you believe that your tax code is wrong then you should contact HMRC on 0300 200 3300.
Class 2 National Insurance Contributions are paid by self-employed people whose profits are above the Small Profits Threshold which for 2017/18 is £6,025.
If you earn below that level you are eligible for the small earnings exception (although this was abolished in 2015) which means that you do not have to pay NI but can pay voluntary Class 2 if you wish to.
If you earn above £8,164 then you pay Class 4 NI as well on your profits.
The payment of Class 2 contributions (which are currently set at £2.85 a week) enables those people who pay them access to contributory benefits (class 4 does not).
However, the 2016 Autumn Statement confirmed that Class 2 NICs will be abolished with effect from 2018/19 and the self-employed will then have to pay Class 4 (or voluntary Class 3) NICs. Class 4 NICs will then qualify for contributory benefits.
The rules around this are quite complex and there will apparently be some transitional help. But in essence, Class 4 contributions will need to be paid by the self-employed on earnings over the Lower Profits Limit.
For 2017/18 the Lower Profits Limit was £8,164 and any profit between that and £45,000 was charged at 9%. Profits over £45,000 are subject to a charge of 2% for Class 4 NICs.
Payment is Dependent on Profits
Once the Class 2 NICs are abolished a new threshold will be introduced called the Small Profits Limit. This will be equivalent to 52 x the Lower Earnings Limit. For 2017/18 this is £6,025.
Anyone whose profits fall between the Small Profits Limit and the Lower Profits limit will not need to pay the Class 4 NI contributions but will be treated as if they have paid them.
As Class 4 NICs will in future give access to contributory benefits, this in turn includes qualifying years for the State Pension.
If your earnings are below £6,025 (or the rate declared for 2018/19) then you will not need to pay NICs but can choose to pay the voluntary Class 3 NICs which are £14.80 a week.
If your earnings are between £6,025 and £8,164 (or equivalent 2018/19 levels) you do not have to pay NI but will be credited with paying Class 4 NICs.
If your earnings are above £8,164 (or 2018/19 equivalent) you will pay only Class 4 NICs at the effective rate.
We have written in the past about the relatively new Marriage Allowance that was introduced so that married couples or those in a civil partnership are able to transfer part of their personal allowance.
The Marriage Allowance can be transferred from one half of the couple that is not using their full personal allowance to the other half who would be able to make use of it at the basic rate of tax.
You can apply for the Marriage Allowance online and to do this you will need some details relating to yourself and your partner. You can check out all the information here.
You can also backdate it to 5th April 2015 if you were eligible for it in previous tax years but have not yet claimed it.
Once you have applied for it, you will continue to have the Marriage Allowance transferred to your partner until you let HMRC know that you are no longer eligible or your circumstances change.
The person who receives the extra allowance will either get it through their tax return or as a change to their tax code, but it can take a few months for it to be processed. Don’t worry though, as it will be backdated to the start of the tax year.
It is generally the case that UK taxpayers will be issued with a new tax code each year. Tax codes are issued to individuals and their employers so that the employer knows how much tax they should deduct from the employee’s earnings.
Standard tax code
The standard 2017/18 tax code for those with simple financial situations (for example, having only one job, no tax owing from previous years, no other employee benefits etc) is 1150L.
This standard tax code means that you are entitled to the UK personal allowance of £11,500 for the year and therefore that is the amount that you can earn before any tax is deducted.
But it may be the case that you do not have this standard tax code or perhaps your code has another letter at the end (instead of L).
If this is the case then you may have one or any of the following which may affect your tax code (and these are just some examples):
earnings from another job
benefits in kind
tax owed from previous years
transfer of the marriage allowance
earnings over £100k
Can’t figure out your tax code?
If you can’t figure it out though, you will probably need to speak to the Inland Revenue to check that you have the right tax code and will not be paying too little (or indeed too much) tax in 2016/17. The number to call for tax code queries is 0300 200 3300.
Or you may find it easier to check your tax code online which you can here do if you have a Government gateway ID.
Tax code letters
So the letters at the end of the tax code may also give you an indication of what your code is all about.
There are a couple of new tax codes that have been introduced recently which take account of the new transferable marriage allowance – those are the letter M if you have received a transfer of the marriage allowance and the letter N if you have given a up part of your allowance.
The personal savings allowance was introduced in April 2016 and it meant that 95% of people no longer had to pay any tax on their savings.
Anyone who was in the 20% or the 40% tax brackets was entitled to a personal allowance of either £1000 or £500 respectively. Those in the highest tax bracket were not entitled to any personal tax allowance.
The figures given are the amount of interest that savers could earn before they would have to pay any tax on that interest. The figures were set for the initial tax year of the allowance which was 2016/17.
But if you are looking to see if the personal savings allowance is increasing for the new tax year 2017/18 then the answer is no, the allowances will remain at the figures of £1,000 for basic rate tax payers and £500 for higher rate tax payers.
With interest rates as low as they currently are this means that savers would need to have a significant amount of savings before they actually need to pay any tax on the income received from those savings.
In addition to the personal savings allowance there is also the £,5000 dividend allowance which means that savers will not have to pay any interest on the first £5,000 of dividend income that they receive.
In the tax year 2017/18 the government will be introducing a new UK tax allowance for minor trading and property activity.
The allowance for each category is £1,000 and this means that individuals (who the government classes as self-starters) who have earnings under these two categories can earn up to the allowance and not pay tax on those earnings.
The allowances are also available to those people who earn more than £1,000 in each category, in which case those people will be able to earn the first £1,000 tax free.
The allowance is aimed at the entrepreneurial people in today’s society who aim to make some extra money on the side by doing things like renting out their driveway or selling goods on eBay.
But it is not just limited to these activities and could include for example people making and selling cakes in their spare time or those who make money buying and selling items at car boot sales. It could also cover people who rent out their garage or perhaps some land and those people who do some paid gardening or DIY work at weekends.
Anyone whose earnings are less than £1,000 a year in these categories will not need to fill in a tax return to declare any of this income but people earning over £1,000 will need to declare those earnings and deduct the £1,000 allowance from the income which would be taxable.
Another prime example would be people who use AirBnB to rent out rooms in their house (but not those who use the rent a room allowance to claim tax relief).
Both reliefs are available so if you have earnings in both categories you can claim up to £2,000 in these additional allowances.