The 2017 Budget
The Chancellor, Phillip Hammond, confirmed that the Autumn Statement, usually in November, would be for future Budget announcements and changes.
Despite the Budget containing few new announcements, there were some changes coming in from 6th April 2017, which may impact your financial plans:
• Higher tax free allowances – An increase in the Personal Allowance from £11,000 to £11,500, and the higher rate tax threshold increased from £43,000 to £45,000 with a continued commitment to increase in future. This is a positive change for all taxpayers and provides additional scope for reviewing income levels.
• Higher ISA limits - The ISA limit increases to £20,000 and the Lifetime ISA launches in April (maximum investment of £4,000 each year), presenting more tax efficient saving opportunities.
• NS&I 3 year Investment Bond - Paying 2.2% with a maximum investment of £3,000 per year, reiterating the Government’s desire to see more saving. However with rising inflation, cash savings may struggle to retain their value in real terms.
• Pension Advice Allowance – If you are in a workplace defined contribution pension scheme, you can use up to £1,500 of your fund towards paying for pensions and retirement advice. The allowance can be used over three separate tax years up to £500 on each occasion.
• Overseas transfers – Qualifying Recognised Overseas Pension Schemes (QROPS). A 25% tax charge will apply on transfers from UK pensions to qualifying overseas schemes requested on or after 9 March 2017, provided you remain domiciled and resident in the UK. In certain circumstances transfers will receive an exemption from this tax charge, such as the use of an employer’s own scheme or if you are emigrating overseas.
• Previously announced changes also due to launch in April 2017 –
o Phased removal of higher rate tax relief for buy-to-let investments;
o the Money Purchase Annual Allowance is reducing from £10,000 to £4,000, if taxable income from either flexi access drawdown or an uncrystallised funds pension lump sum has been taken.
o New Inheritance Tax exemption the Main Residence Nil Rate Band introduced at £100,000 for 2017/18.
Some announced changes are due to come into effect from April 2018:
• Self-employed National Insurance – Class 4 National Insurance Contributions will increase from 9% to 10% from April 2018 and then to 11% in April 2019.
• Dividend Allowance – The £5,000 allowance will be reduced to £2,000 in April 2018, impacting and any equity based investments held outside of ISAs and shareholding company directors receiving dividends as part of a remuneration strategy.
If you feel that these changes may affect your existing financial plans, you can call us on 0344 209 3925 to discuss how these announcements may impact your progress towards your financial goals.
Our lines are open 8.30am to 5.30pm, Monday to Friday. Calls are charge at your phone company’s basic rate. All calls are recorded for business purposes.
This article is for information only, based on our understanding of current legislation and HM Revenue & Customs practice and not to be taken as Financial Advice.
Origen are not tax specialists and should you have any concerns with regards to your personal tax situation, we would recommend seeking advice of an accountant. The value of investment and the income from it could go down as well as up. You may not get back what you invest.
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[ Date Posted: 15/03/2017 17:21:39 ]