6 things you need to know about the 2016 Tax Year Article Image

6 things you need to know about the 2016 Tax Year

The new tax year is upon us with a host of financial changes coming in to play. We take a look at some of them and how they will affect you.

Personal Allowance increased to £11,000 and £43,000 for higher rate tax payers

The personal allowance is the amount of income you can earn before paying tax. From April 2016 people on incomes of £11,000 or less won't pay any income tax.

Interest free savings up to £1000

Basic rate tax payers will pay no tax on the first £1,000 of income from savings. Higher tax rate payers are eligible for a £500 allowance. In practical terms this is equivalent to the interest on around  £75,000 in an easy-access savings account (around 1.31% AER).

Marriage allowance has been increased to £1,100

Marriage allowance is the tax free amount which can be transferred to their husband, wife or civil partner - which saves them around £220 in the tax year.

Rent-a-room allowance rises to £7,500

With the rise of "micro-entrepreneurs" and services such as AirBNB and other room sharing industries, as well as those taking in lodgers or holidaymakers, a landlord or lady can make up to £144 a week without facing an income tax bill. This is generally seen as a much needed incentive with not enough new homes being built. 

Capital Gains tax is cut

Those selling assets are set to benefit with tax being cut to 20% from 28% (10% from 18% for lower rate tax payers). However the annual amount that can be made remains unchanged at £11,100.

New National Living Wage of £7.20

A new national living wage has been introduced for workers aged over 25 - a full time worker is set to receive earnings increase of £900 a year.

For more information on  how these changes could affect your business, get in touch today.

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