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National Minimum Wage, Pension and Dividends

Uk Sterling Cash Money - Image Credit Serge Bertasius Photography at www.FreeDigitalPhotos.netThis article highlights the National Minimum wage from April 2018 along with changes to dividend allowance and pensions.

The national minimum wage from April 2018 as follows:

Age Rate
25 and over 7.83 / hour
21 to 24 7.38 / hour
18 to 20 5.90 / hour
Under 18 4.20 / hour
Apprentice 3.70 / hour

The apprentice rate is applicable to an individual who is:

  • Aged under 19
  • Aged 19 or over and in the first year of apprenticeship

Once an apprentice who is aged 19 or above completes his/her first year, they are entitled to the standard minimum wage.

Apprenticeship
Apprenticeship combines practical training in a job with study. To find more information on apprentice’s eligibility click here.

Employers who have apprentices aged 16-24 can be entitled to a grant of 1,500.00 per apprentice. For more specific details please contact the National Apprentice Service on 0800 015 600.

Pension Contributions
The below table shows the minimum contributions that the staff and employer must pay towards the pension.

Date Employer Contribution Employee contribution
Staging date to 05/04/2018 1% 1%
06/04/2018 – 05/04/2019 2% 3%
06/04/2019 onwards 3% 5%

Exemptions from Auto Enrolment;

  • A sole director company, with no staff
  • A company with multiple directors, none of whom has an employment contract
  • A company with multiple directors, only one of whom has an employment contract
  • A company which has ceased, enter into liquidation or been dissolved

Note: You will need to inform Pension Regulator and they will advise accordingly.

Dividend Allowance

The below table shows the maximum dividend tax-free allowance and the rate which will be taxable if there is any dividends earning over the maximum tax-free allowance.

Date Tax-free Dividend Allowance Tax implications
05/04/2018 £5,000 Basic rate 7.5%
Higher rate 32.5%
Additional rate 38.1%
From 06/04/2018 £2,000 Basic rate        7.5%
Higher rate      32.5%
Additional rate 38.1%

Income tax threshold for 2018/19;

  • Up to £11,850, 0% income tax as this is your personal allowance.
  • Income between £11,851 to £46,350, 20% income tax – Basic rate
  • Income between £46,351 to £150,000, 40% income tax – Higher rate
  • Income above £150,001 – 45% income tax – Additional rate

For more information please contact the Mohammed Jaffer on 0121 455 8055 or email info@harrisaccountancy.co.uk

References:

  1. www.gov.uk/take-on-an-apprentice/employer-grants-apprentices
  2. www.gov.uk/national-minimum-wage-rates
  3. www.thepensionsregulator.gov.uk/employers/contributions-funding-tax
  4. www.gov.uk/government/publications/income-tax-dividend-allowance-reduction/income-tax-dividend-allowance-reduction
  5. www.thepensionsregulator.gov.uk/director-exemptions-from-automatic-enrolment

 

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