But there are promised increases to both in the next two tax years.
- Personal Allowance increases to £10,800
- Higher rate threshold increases to £42,700
Basic rate taxpayers will be better off by £40. Higher rate taxpayers will be £103 better off.
- Personal Allowance increases £11,000
- Higher rate threshold increases to £43,300
Basic rate taxpayers will be better off by a further £40. Higher rate taxpayers will be a further £160 better off.
Personal Savings Allowance
As announced last year, from April, the savings rate of income tax will drop to zero (from 10%) and the savings rate band will increase to £5,000 (from £2,880). This is a boost to those with low earnings but with a higher level of savings income, as savings income can be received tax free.
But those with higher levels of earned income above £15,600 will not benefit from the savings rate band.
However, from April 2016 a proposed new ‘Personal Savings Allowance’ will benefit both basic rate and higher rate taxpayers, irrespective of their level of earned income.
The allowance will be:
- Basic rate taxpayers: £1,000. So those with total income below £16,800 will not have to pay tax on any of their savings. And those with higher incomes, but less than £42,700 will still benefit from £1,000 of tax free savings.
- Higher rate taxpayers: £500. Those with total income above £42,700 will be limited to a tax free allowance of £500.
- Additional rate taxpayers will not benefit from the new allowance.
And in another positive note, savers will see interest paid gross, with no deduction of 20% tax at source by their bank or building society from April 2016.
Entrepreneurs Relief for CGT
Entrepreneurs Relief has been tightened up in respect of assets owned personally but used within a company. Of more concern could be other proposed changes that might limit the availability in certain circumstances, but the details of this remain to be seen.
Please note, this article is for information only and does not constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise; pension rules and tax legislation are subject to change; we do not give tax advice. If you would like investment or pension advice on your individual circumstances, please do not hesitate to get in touch on 01392 875500 or info@SeabrookClark.co.uk