What is different for the 2016-17 tax year?
With a Budget and an Autumn Statement it can be hard to remember what is happening when. Most of the changes announced in the March 2016, will come into force in future years, but some of the things announced earlier come into effect from 6 April this year.
Here are some of the changes that may affect you now:
Tax rates and allowances
2016-17 tax rates and allowances can be found on the Gov.uk website. The Marriage Allowance is now worth up to £220 in terms of tax reduction. It can be claimed by couples where neither are higher or additional rate taxpayers, and one has unused personal allowance.
Taxation of savings income
From 6 April 2016, tax is no longer deducted at source on most interest from savings – such as bank and building society accounts.
Instead basic rate taxpayers will have a Personal Savings Allowance and will be able to receive £1,000 of savings income without paying tax. Individuals with high levels of savings income may have tax to pay.
In addition, up to £5,000 of saving income can be taxed at 0%. The rules here are complex, but you are likely to qualify if your earned and pension income is under £16,000. (See the guide from LITRG for more details).
Taxation of dividends also changes. Tax credits on dividends cease. Instead there is a £5,000 Dividend Allowance which means that there is no tax to pay on the first £5,000 of dividend income you receive. Above this level, additional tax will be due. See HMRC Dividend Allowance factsheet for details.
Capital Gains Tax
The rates of capital gains tax are reduced from 6 April 2016. The rate for basic rate taxpayers falls to 10% (from 18%). This lower rate will not apply to the sale of second homes or buy to let properties.
A new replacement furniture allowance comes in on 6 April for rented out property. The 10% wear and tear allowance is no longer available.
As with all tax issues, you should take advice in your specific circumstances to ensure that you are aware of how the rules will impact you.