Significant tax changes are due in April 2016, so reviewing your financial plans ahead of that could pay dividends.
As investors, looking to use your Isa allowance as well as the tax breaks on pensions always makes sense, as it means that more money and income stays with you and less goes to the taxman.
This year, there are some major changes already announced to come into effect from 06 April. These include a reduction in the Pension Annual Allowance for most people with ‘adjusted income’ of more than £150,000 per annum, and a reduction in the Pension Lifetime Allowance from £1.25m to £1m.
The lifetime allowance situation is a fairly complicated area, so if you believe you may be affected, getting financial advice could well help. The same applies to the situation regarding the Pension Annual Allowance.
With the expectation that the budget on 16 March 2016 could see a reduction in pension tax relief from the current top level of 45% to somewhere between 25% and 33%, making additional pension contributions now could be sensible too, if you are in a position to do so.
Other changes being introduced include a new £5000 tax-free dividend allowance, which replaces the current 10% notional tax credit. Under the new rules, dividend income above £5000 will be taxed at 7.5% for basic rate taxpayers, 32.5% for higher rate taxpayers and 38.1% for additional rate taxpayers.
The new tax year will also see the introduction of a new personal savings annual allowance of £1,000 and £500 for basic rate and higher rate taxpayers respectively.
If you believe that you may be affected by any of these changes and feel that tax planning and financial advice could be useful, contact Kellands today to discuss your plans and options.