The Financial Group
We simplify all those essential financial decisions
Chancellor Philip Hammond delivered his Budget recently, & below we provide the key points. Stamp Duty Land Tax for 1st time buyers o The stand out surprise from this Autumn’s Budget. The zero rate of stamp duty will apply up to a purchase price of £300,000. o Those buying their first home at a purchase price of between £300,000 and £500,000 will also pay less stamp duty than before the Budget, with no change for those whose first home costs more than £500,000. o More details in our Education Section and this month’s Housing & Mortgage Market Income Tax o The income tax personal allowance is increasing from £11,500 in 2017/2018 to £11,850 in 2018/2019, and the basic rate income tax band is increasing from £33,500 for 2017/2018 to £34,500 for 2018/2019. o Those entitled to the full standard personal allowance will pay 40% tax on income above £46,350. (These provisions apply to England, Wales and Northern Ireland. The Scottish Government used its devolved powers to set the basic rate band at the lower level of £31,500 for Scottish taxpayers in 2017/2018. It will publish its Draft Budget for 2018/2019 on 14 December 2017). Pensions o No news is good news! It is business as usual for pension saving as the Chancellor confirmed there will be no imminent changes to pension tax relief. o The Annual Allowance (AA) remains at £40,00. What is the AA? o The Money Purchase Annual Allowance (MPAA) remains at £4,000. What is the MPAA? o The Lifetime Allowance (LTA) increases to£1,030,000 on 6 April 2018. What is the LTA? Individual Savings Accounts (ISAs) o The main ISA subscription limit remains at £20,000 for 2018/2019. o The subscription limit for Junior ISAs and Child Trust Funds is increasing in line with CPI inflation from £4,128 for 2017/2018 to £4,260 for 2018/2019. Lifetime ISA o No change. o Since April 2017, adults aged under 40 have been able to open LISAs. They can save up to £4,000 a year from age 18 to 50, receiving a 25% Government bonus on their contributions. Contributions count towards the ISA limit for 2018/2019. National Insurance o No change o It was announced before the Budget that changes to National Insurance that had been planned to come into effect from April 2018 are delayed to April 2019.This includes the abolition of Class 2 NICs and making all termination payments above £30,000 subject to employer NICs. Tax free dividend allowance o As previously announced, the 0% £5,000 a year dividend allowance reduces to £2,000 for 2018/2019. o For 2018/2019 the rates of tax on dividend income above the allowance remain: 7.5% for basic rate taxpayers. 32.5% for higher rate taxpayers. 38.1% for additional rate taxpayers. Capital Gains Tax (CGT) o The capital gains tax annual exempt amount is increasing from £11,300 in 2017/2018 to £11,700 in 2018/2019. o The capital gains tax annual exemption for most trusts becomes a maximum of £5,850 for 2018/2019. Disabled person’s trusts are entitled to the full exemption. o The capital gains tax rates remain 10% and 20% for basic and higher rate taxpayers, respectively, for 2018/2019. Trustees and legal personal representatives pay the 20% rate. o These rates do not apply to disposals of residential properties that do not qualify for private residence relief - e.g.: Buy2Let property. These are taxed at 18% and 28%. As always, if any of the above prompts any questions, or you need any help, please do not hesitate to contact us.