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New tax year: what you need to know

Category: IFAs

With the dust now just about settling from the Budget fallout over changes to Personal Independence Payments and Iain Duncan-Smith’s subsequent resignation, there are a number of changes which came into force in April, which has managed to escape any sort of Government U-turn.

In no particular order, we have:

National Living Wage

A minimum ‘living wage’ of £7.20 came into force on 1st April 2016, which applies to all workers aged 25 or over. Hopefully, businesses can find a way to make this new wage work, so that the Office for Budget Responsibility’s prediction of 60,000 job losses doesn’t come true.

3% increase on Stamp Duty for anyone buying an ‘additional property’

Second-home buyers and buy-to-let landlords are paying 3% more in stamp duty on purchases over £40,000, as of 1st April. This adds a significant cost to a typical investment property purchase and continues the war on small landlords, which started with the Autumn Statement last year.

Flat-rate State Pension

As with anything pension-related, which appears to have been ‘simplified’, the devil is in the detail and it is estimated that nearly two-thirds of workers who retire within the next four years will get less than the new headline £155.65 pw ‘flat-rate’ state pension. The hardest hit will be those who have ‘contracted out’ of the additional state pension top-ups and consequently underpaid National Insurance contributions at some point.

If you fear that this may apply to you, please do not hesitate to contact us to check.

Increased personal allowances

To finish on a positive note, from 6th April, people are able to earn up to £1,000 in interest on their savings ‘tax-free’ under the new ‘Personal Savings Allowance’. There’s also a £5,000 tax-free allowance on dividends, although a higher tax on larger dividends will mean business owners taking income through dividends are largely worse off. Everyone’s Income Tax Personal Allowance has also increased from £10,600 to £11,000 which is good news.

How Can Hartsfield Help?

For confirmation on how these changes may impact you, please get in touch here with the team at Hartsfield.

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