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 buyersoThe stand out surprise from this Autumn’s Budget. The zero rate of stamp duty will apply up to a purchase price of £300,000. oThose 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.oMore details in our Education Section and this month’s Housing & Mortgage Market•Income TaxoThe 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. oThose 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).•PensionsoNo 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.oThe Annual Allowance (AA) remains at £40,00. What is the AA?oThe Money Purchase Annual Allowance (MPAA) remains at £4,000. What is the MPAA?oThe Lifetime Allowance (LTA) increases to£1,030,000 on 6 April 2018. What is the LTA?•Individual Savings Accounts (ISAs)oThe main ISA subscription limit remains at £20,000 for 2018/2019.oThe 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 ISAoNo change.oSince 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 InsuranceoNo changeoIt 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 allowanceoAs previously announced, the 0% £5,000 a year dividend allowance reduces to £2,000 for 2018/2019.oFor 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)oThe capital gains tax annual exempt amount is increasing from £11,300 in 2017/2018 to £11,700 in 2018/2019.oThe 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.oThe 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.oThese 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.
TheAnnualAllowanceisthemaximumamountofpensionsavingsanindividualcan haveeachtaxyearthatbenefitsfromtaxrelief.Inpractice,anindividualissubjectto ataxcharge(theannualallowancecharge)wheretheirpensionsavingsexceedtheir availableannualallowanceforataxyear,althoughitispossibletocarryforward unused allowances from the 3 previous tax years.The Money Purcahase Annual Allowance applies to individuals who flexibly access pension benefits from a money purchase arrangement. The MPAA limits the contributions they can make to money purchase pension arrangements. The MPAA was introduced on 6 April 2015 and was based on an amount of £10,000 pa for the 2015/16 and 2016/17 tax years. From 6 April 2017 it is £4,000 paThe Lifetime Allowance is the maximum value of benefits you can take from all your registered pension schemes before you have to pay a lifetime allowance tax charge - unless you have enhanced protection. When you take your benefits, they will be tested against your available standard lifetime allowance or personal lifetime allowance (unless you have enhanced protection). If you go over this, a lifetime allowance tax charge will be payable on the excess - this is currently 55% for lump sums, and 25% for funds used to buy pension income (which is taxed under the PAYE system).Still confused? Just give us a call. & we will explain