The start of a new year and tax return is coming, along with all the tax changes that have been made this year.
To start off, income tax. The tax-free personal allowance has been increased. Your tax-free personal allowance is the amount of money you are allowed to earn before income tax is payable. This change from £10,600 to £11,000 is one to be celebrated for many. To add to the good news, a rise to £11,500 will come the following tax year.
Another change to look out for: The amount of money you are able to earn before having to pay the higher-rate of income tax (40%) will increase from £42,385 to£43,000. Although not a massive change, by April 2017 it is set to rise to £45,000 and a further £50,000 by 2020.
The marriage allowance is set to improve (a tiny bit). It may be small, but the marriage allowance will be going up from £1,060 to £1,100. To benefit you need to have an income of the new personal allowance (£11,000) or less and your partner must fall into the new basic-rate taxpayer sect (£11,001-£43,000).
The new national living wage for employees age 25 and over will rise to £7.20. Although, this actually cam into affect on the 1st April this year (5 days before the start of the new tax year). This is a 50p extra an hour improvement on the £6.70 pay for workers age £21 and over.
Stamp duty is going up. That means landlords and buyers of second homes will have to face a 3% surcharge on the existing price band from 1st April 2016.
Another hit to the landlords: Wear and tear allowance is being drawn to an end. The allowance meant that landlords could offset 10% of their rental income against tax for maintenance, regardless of whether any repairs were carried out. From April 2016, only maintenance/repair work that can be proven is allowable.
Capital gains tax will fall by 10% for both higher rate and basic rate taxpayers. However, the Capital Gains Tax rate on residential property sales will remain at 18% for B/R taxpayers and 28% for H/R tax payers.
Personal savings will also be active. From the 6th April, individuals with taxable income between £17,000 and £43,000 a year are eligible to a £1,000 tax-free allowance. Higher rate taxpayers are also allowed access to the allowance, however the amount is capped to £500. ISA allowanced are frozen at £15,240, while Junior Isa’s remain at £4,080.
Pensions basic state pension will rise to a maximum of 119.30 per week from £115.95. A new state pension: those reaching state retirement by 6th April 2016 could receive up to £155.65 a week under the new single-tier pension, but not everyone will be eligible.
Follow our blog to find out what else has changed with taxes tommorow!