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Another tax year end brings more changes – what does it mean for you?
Just when you think you have got to grips with the tax rates, another year passes and brings with it new rates and new allowances. This means that you must review again whether you have a requirement to register under self-assessment with HM Revenue & Customs and submit annual tax returns.
From 6th April 2017, the value you can earn before you have to pay income tax has been increased to £11,500. This is called the personal allowance.
Further income tax allowances are available such as the new dividend allowance which was brought into effect from 6th April 2016. The dividend allowance is currently £5,000 and was introduced to replace the dividend tax credit. This means that an individual can receive dividends of up to £5,000 without charge to income tax. This is on top of the personal allowance.
Although the dividend allowance continues to be £5,000 for the current tax year, the Government has already announced that the allowance will be reduced to £2,000 from 6 April 2018. Those individuals who receive dividend income in excess of £2,000 and exceed their personal allowance will, therefore, be liable to pay income tax under the self-assessment regime.
There is also a savings allowance of £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, meaning these could earn up to £1,000 or £500 on savings income before you have to pay income tax.
The tax year commencing 6th April 2016 also saw changes relating to bank interest. From this date, all interest received from banks and building societies is being paid gross, without deduction of income tax. From 6th April 2017, this is extended to include interest paid from investment companies such as unit trusts and open ended investment companies (OEICS). Therefore, should your level of income received from these sources exceed the allowances you are entitled to, you will have a liability to report to HM Revenue and Customs and pay the income tax due accordingly.
Further allowances are also available.
It can be cumbersome, not to mention frustrating, dealing with HM Revenue & Customs. Did you know that you can appoint an Agent to act for you? An agent can submit tax returns and speak to the Revenue about your tax affairs on your behalf.
If you are liable to pay income tax to HM Revenue & Customs, you have a requirement to inform them within 6 months of the end of the tax year, so by 5 October. Please visit www.gov.uk for further information or contact our specialist Wealth Management Team on 01392 207020 or email: email@example.com.