Personal finance: changes in the 2017/18 tax year
As we enter the final months of the 2016/17 tax year, our attention begins to turn to what the next financial year has in store.
With several important changes on the horizon, it’s important that you begin to plan your finances for the year ahead.
Here are 5 upcoming changes that could affect your personal finances.
Income tax
Basic and higher rate taxpayers will enjoy a reduction in their income tax bills as the personal allowance, as well as the basic rate and the higher rate thresholds increase in the 2017/18 tax year.
The personal allowance, will rise to £11,500 from its current level of £11,000. The basic rate threshold will increase from £32,000 to £33,500 while the higher rate limit will rise by £2,000 to £45,000.
Non-doms
George Osborne’s 2015 summer Budget changes to the taxation of non-domiciles will come into effect in the 2017/18 tax year.
From April 2017, non-doms who have resided in the UK for 15 out of the last 20 years will be treated as UK-domiciled for tax purposes. This will remove the £90,000 remittance basis charge for individuals residing in the UK for more than 17 years.
Lifetime ISAs
Individuals will be able to access the government’s new Lifetime ISA from April 2017.
Lifetime ISAs enable savers to take advantage of a 25% annual government contribution. Savers will be able to deposit up to £4,000 each year, resulting in a government bonus of up to £1,000.
Account holders must be aged between 18 and 40, and the deposits must be used either to purchase a first home or contribute towards retirement savings.
Property and trading income allowance
There will be 2 new £1,000 allowances introduced – one for property income and one for trading income – at the start of the 2017/18 tax year.
Individuals will not have to pay tax on property or trading income up to £1,000. The allowance will be deductible on amounts exceeding £1,000.
Pensions
The money purchase annual allowance (MPAA) will be reduced from £10,000 to £4,000 from April 2017.
Individuals with defined contribution schemes who have already withdrawn more than 25% as a lump sum or accessed their savings via flexible drawdown will become liable for tax on annual contributions exceeding £4,000.
Contact us
Unsure how to position your personal finances for the 2017/18 financial year?
Contact us on 01628 631 056 or send us an email at tracya@knightandcompany.co.uk for more information about the upcoming changes.