UK Tax Budget 2016 – What It Means To You
Overall
The chancellor of the United Kingdom George Osborne focused on the futures of the next generation ensuring that they will start their futures in a strong economy, making sure they are better educated and putting emphasis on their health.
He has introduced a “sugar tax” on the soft drinks industry, this fund will be given to schools. Giving them the opportunity to establish longer days, encouraging students to get involved in extra-curricular activities.
Personal Allowance
The basic personal allowance for 2016/2017 is £11,000 this will increase to £11,500 for 2017/2018. If your adjusted net income exceeds £100,000 the personal allowance is reduced by £1 for every £2 over £100,000 giving an effective rate of 60% on income between £100,000 and £122,000 for 2016/17. Contact us for advice on planning to avoid this 60% rate.
Tax Bands
The 20% basic rate band for 2016/17 will be £32,000 and for 2017/18 it was announced that this will be £33,500. This means that you will pay 40% tax if your taxable income exceeds £43,000 for 2016/17 and the threshold will be £45,000 for 2017/18. The 45% top rate continues to apply to taxable income over £150,000 for 2016/17.
FURTHER CHANGES TO ISAs
The ISA limit is £15,240 and has been frozen for 2016/2017, with the Junior ISA limit staying at £4,080 for 2016/2017. The ISA allowance will grow to £20,000 from 6 April 2017. The “Lifetime ISA” will also be introduced on the 6th April 2017 for investors aged 18 to 40, saving up to £4,000 a year will have up to £1,000 (25%) added by the government. The “Help to Buy” ISA account holders can transfer their savings to this new account, which is aimed to help them use these savings to buy their first home or they can be used as an additional pension plan.
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