For small investors the start of the new tax year heralds some good news with some new tax free allowances in addition to any ISA allowances or ISA that income that you may have.
 
Interest:
 
Banks and Building Societies will no longer deduct tax on your interest from 6 April 2016.  Instead, you will receive your interest gross and not pay tax in certain circumstances:

• For basic rate tax payers the first £1,000 is tax free
• For higher rate tax payers the first £500 is tax free
• For additional rate tax payers there is no tax free allowance

 
Interestingly there is no ‘abatement’ of the allowance, so basically if your income is £1 over the basic rate limit, then you receive only the £500 allowance.
 
If you receive significant interest which has previously been taxed, then you need to be prepared to pay the tax and complete a Self Assessment.

Many clients may want to call me for a chat about this, or if you're busy and feel more comfortable, then contact us through the website here.

​Most of the business press has majored heavily on the negative impact of the dividend tax on small family owned businesses and to be fair it is going to be a new tax that some people are not used to paying which will come in one lump sum at 31 January 2018.

The one positive to draw from the new rules if you’re a family owned company is that there is no more ‘grossing up’ i.e. what is drawn goes directly to your tax return without being adjusted upwards from net to gross income which can cause confusion. 


This can be helpful for things like tax credits and drawing a bit more without losing child benefit – as a reminder the thresholds are:

• Personal Allowance £11,000
• The 40% rate starts at £43,000
• Child benefit continues to be clawed back from £50,000 (MORE INFORMATION HERE)
• You start to lose your personal allowance from £100,000

For the smaller investor the first £5,000 can be useful as it is tax free now and will not attract higher and additional rate tax unless dividends exceed this amount.  Any dividends above the £5,000 will be taxed as normal plus the new 7.5% dividend tax.

As usual, if you have any questions about Dividends, or anything else that concerns you, then please call us for a chat, or else contact us via the website here.

​Gift aid is a great way to help charities and donations are topped up by the Government with the charity reclaiming the tax. 

​Any donations made by higher rate tax payers are also subject to additional relief via Self Assessment so its important to keep all of those ‘just giving’ receipts and notes of your direct debits.
 


Conversely given the changes to interest and dividend taxation above there will be people who no longer pay tax.  It’s therefore important to make sure you don’t tick the gift aid box and you review any direct debits as HMRC are quite entitled to come to you and ask for the tax back that the Charity has claimed. 

​This is particularly relevant to retired people who rely on investment income or those taking career breaks – with interest and dividends paid only periodically sometimes it’s too late when you realise that you’ve not paid any tax!

If you'd like to discuss any donations you've made and are interested to find our how this impacts you, then please call for a chat, or contact us via the website here.

From April 2017, there will be 2 new allowances – one for selling goods or providing services and the other for income from property you own.  Both are £1,000 and you can claim both of them.  

It’s important these are not in any way classed as trades.  Here are some practical examples:
 

• Land and property – renting part of your garden or say a spare garage for storage
• Goods and services – selling goods you have made online on websites such as Ebay

 
Technically until 5 April 2017, this income should be declared.  Don’t forget that this also sits over and above the rent a room relief which is currently £7,500, so its fine to have a lodger too within this scheme!  More details can be found by following this link. 

If you have any questions or need to talk to us about your allowances, please give me a call, or contact us through the website