A roundup of the main 2018 April tax changes as the sugar tax comes into force

 
Rebecca Smith
Sugar tax comes into force
Sugar tax comes into force (Source: Getty)

With spring - sort of - in the air, a shake-up in the tax system is also on the cards with the new tax year starting today.

From the much-discussed sugar tax to the ongoing fuel duty freeze, here's a roundup of what's changing - and what has proved controversial.

Read more: Sugar tax a 'cynical' government cash grab, say think tanks

National Living Wage rise

It rises to £7.83 an hour from £7.50 an hour - for those aged 25 and over (and not in the first year of an apprenticeship), they are legally entitled to at least the National Living Wage. Those under 25 and apprentices will be in line for the rise in minimum wage.

Personal allowance on the up

That goes up to £11,850 - People don't have to pay tax on the income they earn below this amount, though there are exceptions here for high earners. Your personal allowance goes down by £1 for every £2 that your adjusted net income is above £100,000, so your allowance would be zero if your income hits the £123,700 mark or above.

The government has said that the changes should mean a typical basic-rate taxpayer will take home £1,075 more than in 2010-2011.

Pensions

The state pension will go up by three per cent, with a cash increase of £3.65 a week for those in retirement, according to the Treasury.

From today, the workers who have auto-enrolment pensions will have to pay more in, with monthly contributions rising from a minimum of one per cent to a minimum of three per cent.

Fuel duty freeze

It stays frozen for the eighth year in a trot at 57.95p per litre, saving the average driver £160 a year.

Student loan tweaks

The threshold graduates begin to pay back student loan goes up to £25,000, continuing to rise "in line with changes to average earnings".

Sugar tax scrutiny

Some changes have been more controversial than others. The sugar tax which is introduced today means consumers have to pay up to 24p extra per litre for fizzy drinks.

Some think tanks have said the tax will only harm poorer consumers, with the Institute for Economic Affairs saying the sugar levy is "a cynical revenue raising device that will clobber people on low incomes".

The government though, said it hopes this will encourage people to make decisions that will make them healthier.

Income tax

The point at which workers start paying tax rises from £11,500 to £11,850, with the level at which workers start paying higher rate tax rising from £45,000 to £46,350.

Inheritance tax

Those who own a home will face less inheritance tax when passing it on. There isn't a rise in the main exemption, which is the first £325,000 of any estate, but the extra exemption for property goes up from £100,000 to £125,000.

Council tax

Council tax went up by an average of 5.1 per cent from the beginning of April, with Londoners seeing an average rise of £55.

Apprenticeship levy furore

And one year on from the introduction of the apprenticeship levy, business groups have been clamouring for reform of the policy, with firms leaving over £1bn of funding untouched.

Data published by the Open University today shows that businesses have paid £1.39bn into new National Apprenticeship Service accounts, yet have withdrawn just £108m. Businesses have only one year left to spend that money before it begins to expire.

It was aimed at boosting the UK's skills base by requiring firms with an annual wage bill of £3m or more to pay 0.5 per cent of their staff costs into a fund that is also topped up with public money.

Read more: Business groups slam apprenticeship levy as firms fail to withdraw funds

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