Income tax
The tax-free personal allowance is being increased in April 2017, to £11,000. This will start with an increase in April 2016 to £10,800. The allowance set for April 2015 is £10,600.
Savings tax
From April 2016, a tax-free allowance of up to £1,000 will be introduced on savings interest meaning you will not pay tax on any interest income up to £1,000. To be eligible for the full £1,000 allowance, your taxable income needs to be less than £42,700 a year. If your taxable income is between £42,701 and £150,000 you will be eligible for a £500 allowance.
Using an interest rate of 1.5% as an example, a basic rate taxpayer would need savings above approximately £66,000 in order to go over their £1,000 allowance.
Taxable incomes over £150,000 will not be eligible for the allowance and will still be taxed on all income from savings interest.
ISAs
ISAs will be adapted to be more flexible in plans due this autumn. The new rules will allow you to withdraw and repay some of your ISA savings without losing the tax benefits. Under current rules, you can withdraw your money but this doesn’t reduce your tax-free savings limit (currently £15,000) which can be significant if you have already paid in up to your limit and want to then repay some of what you have taken out.
Make sure you repay what you’ve taken out before the end of that particular financial year though otherwise this perk will be void. The annual savings limit will increase for 2015/16 to £15,240.
First-time buyers
A new Help to Buy ISA for first-time buyers has been announced. The government will boost savings with a 25% bonus up to a maximum contribution of £3000. There are some restrictions and limitations of course! Full details available here: https://www.gov.uk/government/publications/help-to-buy-isa-factsheet
Annual self-assessment tax return
Annual SA returns will be abolished and be replaced by a new digital tax account were the majority of your information will be uploaded automatically. Businesses and individuals will be able to link their own accounting software and bank accounts to the digital tax account, removing the need to submit an end-of-year return and also enabling the annual bill to be paid in installments.
Broadband and mobile networks
£600m is being invested to deliver better mobile networks and a committment to get all UK premises with access to ultrafast broadband.
Fuel duty
The duty increase scheduled for September has been cancelled.
Alcohol duty
There will be another penny off a pint, a 2% cut for spirits and most ciders, and a freeze on duty on wine.
Please contact us via email or telephone for any advice on how the budget may affect you.
Original articles and further information available on:
www.gov.uk
www.bbc.co.uk
www.dailymail.co.uk
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