Planning ahead for the new tax year

Following the start of a new tax year, we take a look at some of the changes in legislation and remind you of your personal tax reliefs in 2018/19.

The new tax year brings two significant changes that you need to be aware of:

1. Dividend allowance reduces to £2,000

The tax-free dividend allowance decreased to £2,000 from £5,000, meaning only the first £2,000 of dividend  income will be tax free.

2. Further interest relief restrictions for residential landlords

The next phase of the “Clause 24” interest relief restrictions is triggered, meaning that residential landlords are only able to deduct 50% of their finance costs as an expense against rental income. The remaining 50% will get relief at the basic rate as a tax reducer at 20%.

In addition to these, we remind you of your other tax allowances and reliefs, particularly those in which you would benefit from acting upon as early as possible:

Increase to personal allowance and higher rate threshold

The personal allowance has increased to £11,850, with the higher rate tax threshold increasing to £46,350.

Pensions annual allowance

The annual contribution allowance is £40,000 (providing your adjusted income is less than £150,000) which can be increased by any unused annual allowance of the previous three years. Contributions in excess of the allowance may be subject to a tax charge.

Capital Gains Tax annual exemption

The annual exemption for individuals is £11,700. To ensure efficient use of this, you could consider the timing of the sale of assets or transferring assets to your spouse/civil partner.

ISA allowance

The ISA limit is £20,000 and is a ‘use it or lose it’ allowance as it cannot be carried over. Children under the age of 18 who do not have a trust fund are also entitled to an ISA allowance of £4,260.

Marriage allowance

Marriage allowance allows married couples or civil partners to transfer 10% of their personal allowance between them, providing that one member of the couple has income below £11,850 and the other’s income is between £11,850 and £46,350.

If you would like to discuss any of this in more detail, our team of tax experts are here to help.

Visit our Tax pages to read nore about the services we offer in this area.

Contact Rob Case for more information by emailing or call 01242 776000.