April 6 – the start of the 2016-2017 tax year is a big day for tax with a number of new measures covering pensions and earnings affecting landlords taking effect.
Now’s the time to check out your finances in readiness for the day – and to make sure you do not lose out, here’s a list of the changes:
- Landlords renting out furnished homes lose the 10% wear and tear allowance. The allowance is replaced with a new wear and tear or replacement allowance for all landlords.
The 3% stamp duty surcharge also comes into force for buy to let or second homes worth more than £40,000 in England and Wales
More about wear and tear allowance and the stamp duty surcharge
- Rent A Room Relief for householders taking in a lodger rise from £4,250 to £7,500 a year
- The basic and additional state pensions are replaced by the flat rate pension paying £155 a week to all qualifying pensioners. To receive the full payment, the qualifying rules have changed – from 30 years of full working to 35 years
More about the single-tier state pension
- The annual allowance for pension contributions tapers from £40,000 to £10,000 on tax relief depending on annual earnings. Those earning the highest- more than £150,000 a year – gain the least
More about annual pension contributions
- The lifetime allowance for retirement savings drops from £1.25 million to £1 million. Retirement savers already exceeding the cap can apply for protection – those that do not make the application will pay fines if their pension funds grow above the lifetime allowance limit
More about the lifetime allowance
- Tax rates on taxable lump sums paid by Qualifying Recognised Overseas Pension Schemes (QROPS) as death benefits are slashed from 45% to the recipient’s marginal rate
More about offshore pension tax rules
- The Scottish rate of income tax comes into force
More about the Scottish rate of income tax
- The personal savings allowance is introduced
More about the personal savings allowance
- The dividend tax allowance is introduced
More about the dividend allowance
This is not an exhaustive list of tax changes for April 2016 – and the date those that affect companies take affect is from April 1.
Lots of changes hurting landlords especially to interest relief whereas large companies appear to be paying minimum tax by comparison to landlords, who are being targeted ,and most are providing the housing that the government can’t (the small amount of rogues muddy the picture) but perhaps that will change when landlords think of alternatives and supply runs out or rents escalate to compensate!
Hang on I have got a solution! Change name to google renting inc. – pay no tax for 10 years then negotiate tax with HMRC to 2% – sorted!!