What to expect from the 2017/2018 financial year

The first two weeks of April introduce some big reforms for your finances.

Income Tax
As highlighted in the spring 2017 Budget, your tax free personal allowance will rise from £11,000 to £11,500 which means that the amount someone can earn tax free in 2017/18 will be over 75% higher than in 2010. This should save over 20 million people £100 a year. At the same time, the starting point for somebody to enter the higher rate tax band will move from £43,000 to £45,000, saving higher rate tax payers a further £400 per year. This is not the case however in Scotland, as the higher rate threshold for earned income has been frozen at £43,000.

As detailed in this (www.klarityvision.com/lifetime_ISA) post , the new Lifetime ISA will be introduced in April. In addition to this, the allowance for saving into an ordinary ISA goes up from £15,250 to £20,000. ISAs allow investors to put money into a range of savings without paying tax on interest, dividends or capital gains.

Inheritance Tax
Currently, any estate worth more than £325,000 carries a tax liability of 40% on anything above that threshold, however there will now be a new transferrable main residence allowance on property within the estate, enabling individuals to pass on an extra £100,000 tax free.

Under current legislation, anyone who has taken out a loan to purchase a buy-to-let property can deduct all of the interest in order to reduce their income tax liability. From April, this relief will be restricted for higher rate tax payers to 75%, increasing the tax paid on rental income.

Car Tax
The way that vehicle tax has changed, so that for the first year it will be based on CO2 emissions and after that will depend on the type of vehicle. The new regulations mean that all new cars will face a significant increase in their tax demands during the first year of registration and from their second year onwards a flat rate will apply. You can find out more about this here (www.klarityvision.com/car_tax)

Anybody resident in the UK for more than 15 of the past 20 years will be deemed a UK domicile for tax purposes from 6 April 2017. In addition, individuals who have a UK domicile at birth and subsequently become domiciled overseas will revert to being UK domiciled for tax purposes if they become UK tax resident.