Seeing as we’re closing in on the beginning of a new tax year, we thought you might like a quick recap of the Personal Allowances for the 2016/17 tax year!
From 6th April 2016, the Personal Allowance (the amount an individual is able to earn before their income becomes subject to tax) will increase to £11,000 from £10,600 this tax year. Additionally, there will be an increase in the Higher Rate Tax Threshold (HRT) from the 6th April 2016 taking the new threshold to £43,000.
The income limit for the Personal Allowance will stand at £100,000 however, the individual’s personal allowance is reduced where their income is above this limit. The allowance is reduced by £1 for every £2 above the limit
It is also important to note that there will be one Income Tax Personal Allowance from the 2016-17 tax year regardless of a person’s date of birth.
The level of tax per tax bracket will remain the same;
There’s a notable change to the way that Dividends are taxed, from April 2016, the Tax Credit will be abolished and replaced with a £5,000 tax-free Dividend Allowance (individuals will not have to pay tax on the first £5000 dividend received). Dividends will then be taxed as follows;
From April 2016, a new Personal Savings Allowance means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income.
The 2016-17 subscription limits will remain unchanged from the current tax year:
From 6th April 2016, there is going to be a significant change to the way in which you can withdraw and re-invest in ISA. Traditionally, if you withdraw funds from your ISA, rather than transfer, you would lose that element of your annual tax-free allowance however, from the new tax year that is set to change. The change will see savers permitted to withdraw from and reinvest in a Cash ISA within a tax year without eating further into their annual ISA allowance.
If you’d like any further information, have a question or would like to make an appointment to receive some financial advice simply get in touch using the form below and we will get back to you as soon as possible.