Post April changes
The new dividend rules come into effect on 6 April 2016. The notional 10% tax credit is to be removed which would mean that a dividend payment will be a gross payment for tax purposes and the first £5,000 of dividends will be tax free.
The following tax rates will apply to dividends:
- 5% (basic rate)
- 5% (higher rate) and
- 1% (additional rate)
If you are using dividends as your main source of income you may need to relook at whether this is still the best way for you moving forward.
Buy to let:
Buy-to-let investors and holiday home buyers will be hit with an additional 3% increase on the stamp duty fee for all property purchases. This increase is in addition to the set stamp duty rates already in place and will apply to buying second properties, such as holiday homes, in which the owners do not intend to live full-time.
If you have already exchanged on your property purchase, it would make sense to try and complete before the end of the tax year to avoid the additional stamp duty fee!
Pension annual allowance:
The Annual Allowance will remain at £40,000 for each tax year. However, if your income exceeds £150,000, you will see their annual allowance fall, via a sliding scale, to as little as £10,000. The allowance reduces by £1 for every £2 of income above £150,000.
Individuals should also take advantage of the carry forward rules which enables the last 3 years unused allowances of £50,000 ( pre 2013/14) and £40,000 (2014/15 onwards) to be utilised in the 2015/16 tax year.
If you are unsure how these changes may affect you and want to discuss how to take advantage of the next couple of weeks get in touch or call 0161 249 5040