With the new financial year is drawing ever closer, now is a great time get on top of your finances for 2016/17. Here’s what you need to know about the key upcoming changes that might affect you this coming financial year.
The tax free personal allowance is set to increase from 6th April 2016. Currently this stands at £10,600, but will jump to £11,000. All other things being equal ,this means those earning £11,000 and over will be £400 better off. Be sure to check your payslip in April to make certain you’re on the right tax code.
National living wage
Those over 25 and on the national minimum wage will see their hourly pay increased to £7.20 from the first hour on 1st April. It’s no joke. This will amount to an increase of 50p per hour in your pocket, and while it doesn’t sound like much, it could be worth as much as £900 over the course of a year.
Personal savings allowance
A new Personal Savings Allowance will come into affect from April. At it’s core, it means that banks and building societies will no longer automatically apply a 20% tax on interest earned savings.
The allowance covers both basic and higher rate tax payers, with the former ( those earning up to £42,700) able to earn up to £1,000 in savings interest tax free, while the latter with benefit to the tune of £500. See out guide ‘Understanding the new Personal Savings Allowance‘ for more information.
A new benefits cap is due to come in at some point in the new financial year. This limits maximum benefits that can be awarded to those of working age to £20,000 per year. If this affects you, see the Citizens Advice guide for more information.
Those in council or social housing will see a 1% fall in the cost of their rent over the year, and a further 1% year-on-year for the next four years.
Dividend tax changes
Company owners, who pay themselves mainly through dividends, will be adversely affected by the changes to dividend tax. The new measure introduces a new £5,000 tax free rate with new bands of 7.5%, 32.5% and 38.1% above this for basic rate, higher rate and additional rate taxpayers respectively.