03Apr

The new tax year is with us, so here are some things that changed on April 6 that you need to be aware of:

• The Individual Savings Account (ISA) allowance has risen significantly, from £15,240 to £20,000
• A new lifetime ISA has been launched. These can be opened by anyone aged 18 to 39 and allow contributions of up to £4,000 per year. The Government will add a 25% bonus to all contributions, and intends that the funds in a lifetime ISA should be used either to save for a first-time buyer deposit, or to save for retirement. Lifetime ISA holders can then invest the remaining £16,000 of their allowance in other ISA products
• The Junior ISA contribution limit has risen to £4,128
• The Personal Saving Allowance (PSA) – the amount an individual can receive in savings interest before being taxed – remains at £1,000 per annum. However, from this tax year onwards, interest payments received from corporate bond or gilt funds are also included in the £1,000 allowance. All such payments will be paid gross, and individuals must declare any income received over and above their PSA on their annual tax return
• The Money Purchase Annual Allowance has been slashed from £10,000 to £4,000. This means anyone who has already accessed a pension flexibly – via drawdown or lump sum withdrawals- can only make contributions of up to £4,000 per annum without incurring penalties
• The higher rate income tax threshold – the level above which income is taxed at 40% – has increased to £45,000. However, the Scottish Government has exercised its powers to vary income tax levels for the first time, and the threshold will remain at £43,000 in Scotland
• The personal allowance – the level of a person’s income on which no income tax is paid, has risen to £11,500. This increase applies throughout the UK
• The first £1,000 of income from providing certain goods or services is now tax-free. The new allowances cover goods/services such as sharing tools, providing a lift share, selling goods one has made or renting out a driveway or loft storage
• The National Insurance Lower Earnings Limit for Class 1 contributions is now £113 per week and the Upper Earnings Limit £866 per week
• The profit threshold for paying Class 2 contributions by the self-employed has risen to £6,025 per annum
• The self-employed now pay Class 4 contributions on earnings between £8,164 and £45,000 per annum
• Most child benefit and child tax credit payments have been frozen and have not increased
• A new ‘family home allowance’ permits people to leave their residential property to their direct descendants, such as their children, and not pay inheritance tax on a large part of the proceeds. An individual will benefit from an increase of £100,000 in their nil-rate IHT band for this purpose, while the nil-rate band for a couple in a marriage or civil partnership will increase by £200,000
• Salary sacrifice has effectively been scrapped on most perks. Tax advantages are now only available for: employer pension contributions, pension advice provided by the employer, childcare that is supported by the employer, provision of nurseries in the workplace, charitable donations made via PAYE, ultra-low emission cars and provision of bicycles and helmets for the Cycle to Work scheme
• Anyone who has lived in the UK in at least 15 of the previous 20 years will be considered to be UK domiciled for tax purposes, even if they are also entitled to claim ‘non-dom’ status

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.