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Jennie Brown, tax partner at Streets Chartered Accountants, considers tax changes set to affect individuals’ finances.
As we usher in the new tax year, several significant changes are set to impact individuals’ finances.
The key changes and their impact are outlined below:
Dividend allowance slashed
The tax-free dividend allowance has been reduced from £1,000 to £500. This will affect both those who receive dividends as part of investments but also individuals who trade through a limited company preferring to take a minimal salary, plus dividends – an approach which can be more tax efficient in terms of remuneration planning, as dividends are not subject to National Insurance and taxed at a lower rate than salary.
However, National Insurance Contribution reductions, along with Corporation Tax rises and the reduction in dividend allowance have and will for some make being self-employed or paying them a salary rather than dividends more attractive. Therefore, it may be time to review your remuneration strategy.
Capital Gains Tax threshold reduced
The annual exempt allowance for capital gains tax (CGT) will be halved from £6,000 to £3,000, down from £12,300 just two years ago. Additionally, there will be a new reduced CGT rate of 24% for residential property
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