The UK Budget set out an increase in the personal allowance, which rises from £11,500 in 2017/18 to £11,850 in 2018/19. The basic rate band is £33,500 in 2017/18 and £34,500 in 2018/19. So the threshold at which the 40% band applies increases from £45,000 to £46,350 for those who are entitled to the full personal allowance.

For taxpayers treated as resident in Scotland, it’s a different story. In 2017/18, (other than for savings and dividend income, where the £33,500 basic rate band applies), the basic rate income tax band for Scottish residents is £31,500. This means that Scottish taxpayers will generally pay higher rate tax if their income (other than savings and dividend income) exceeds £43,000, or if total income exceeds £45,000.

The Scottish Budget 2018/19 proposals include new tax rates and also new bands, making a total of five tax bands in all. For 2018/19, the rates and tax bands applicable to Scottish taxpayers on income other than savings and dividend income are expected to be as follows:

Scottish Bands Band name Scottish Rate
Over £11,850 – £13,850 Starter 19%
Over £13,850 – £24,000 Basic 20%
Over £24,000 – £43,430 Intermediate 21%
Over £43,430 – £150,000 Higher 41%
Over £150,000 Top 46%

The figures above assume the individual is entitled to a full UK personal allowance. The personal allowance will be reduced if an individual’s adjusted net income is above £100,000. The allowance is reduced by £1 for every £2 of income over £100,000.

There is also change in sight for Welsh taxpayers, with Welsh rates of income tax in prospect from 6 April 2019.

Employers may need to nudge employees – Scots or Welsh – to be sure that HMRC are kept up to date with address details. Changes can be notified, and current details kept by HMRC checked, online via the Personal Tax Account. An individual can sign into their account, or set one up at https://goo.gl/LkVoL2

There is a special S tax code for Scottish taxpayers, which should be issued by HMRC: employers should not make decisions on residence status. If you have questions on this area, or any other aspect of employer payroll procedure, please contact us for advice.

National Minimum Wage: new rates from 1 April 2018

In the biggest rise in National Minimum Wage (NMW) rates for those under 25 for a decade, new rates apply from 1 April 2018.

18-20 and 21-24 year-olds see increases of 4.7% and 5.4% respectively. There is also a 4.4% increase in the National Living Wage (NLW) for those aged 25 and over.

NMW and NLW vary depending on age and whether or not a worker is an apprentice.

  Rate from 1 April 2018
NLW for workers aged 25 and over £7.83
the main rate for workers aged 21-24 £7.38
the 18-20 rate £5.90
the 16-17 rate for workers above school leaving age but under 18 £4.20
the apprentice rate * £3.70

*for apprentices under 19, or 19 or over and in the first year of their apprenticeship

There are no exemptions from paying NMW on the grounds of the size of the business.