Save content
Have you found this content useful? Use the button above to save it to your profile.

Are you making the most of April’s tax changes?

15th Mar 2016
Save content
Have you found this content useful? Use the button above to save it to your profile.

This April witnesses some significant personal tax changes scheduled for the start of the new tax year.  If you haven’t already, there’s a great opportunity to reach out to clients and offer additional advice, and guidance in the run up to the changes.  In doing so you may well win more advisory work and create added value and client loyalty.

To help, we’ve jotted down a handful of changes, which you might want to flag and give guidance to ensure clients make the most of their end of year tax planning:

  • Changes to the tax rules around Dividends with the introduction of the new Dividend Allowance. Depending on the tax paying bracket they fall into, company directors/shareholders may want to consider whether or not they should be making higher dividend payments before 5th April when the changes come into effect
  • From 2016-17 there will be one income tax personal allowance (£11,000), irrespective of an individual’s date of birth.
  • The personal tax basic rate limit for 2016-17 will be increased to £32,000. The higher rate threshold over which individuals pay income tax at 40% will move to £43,000
  • There will be a reduction in the Pensions Lifetime Allowance. This is the limit on the total amount of pension savings that can be accumulated without a tax charge.  Any excess over that limit will be taxed at 25% (if used to increase pension) or 55% (if taken as a lump sum) when the individual starts to take their pension or benefits. From April 2016 the Pensions Lifetime Allowance will reduce from £1.25m to £1m.
  • Tapering of pensions annual allowance – the annual allowance remains at £40,000, but from 6 April 2016 will be subject to a tapered reduction for taxpayers with high earnings. The contribution level will drop to £10,000, tapered down from £40,000 by £1 for every £2 of income over £150,000. Given the reduction, it may be advisable to utilise unused relief from 2012-13 [when the limit was £50,000], which will be unavailable after 5 April 2016.

Tax changes now seem to be very much the norm than the exception.  Accountants are in a great position to proactively alert clients to those changes which will personally affect them. In doing so, they can build greater client loyalty and often win additional advisory work.

If you haven’t alerted relevant clients to how the new tax year will affect them, the clock is certainly ticking.  And don’t forget to see what further changes the Chancellor’s Budget brings to personal and corporate tax.

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.