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Important Income Tax Changes

 

Have you considered whether you need a check of your annual tax position following the changes that have taken place since 6th April 2016?

Alison Jessop has been working for Everys in our Exmouth Office for over 20 years and has over 30 years' experience of Personal Taxation.  She would be happy to complete a review of your tax position and if necessary, assist with the completion of a Self Assessment Tax Return.

From 6th April 2016 in most cases, interest and dividends are paid to individuals gross, without the deduction of income tax or tax credit.

There are two new HMRC Allowances to offset against interest and dividend income.  For the 2016/17 tax year these are:-

 Personal Savings Allowance of £1000 for basic rate taxpayers  and £500 for higher rate taxpayers.

 Dividend Allowance of £5000.

These allowances are in addition to your Personal Allowance of £11,000 for the 2016/17 tax year.

If you are in receipt of interest over £1000 and/or dividends over £5000 per annum and have used your Personal Allowance against other income such as earnings and pensions, then you will need to advise HMRC. 

The tax rate on interest over £1000 (or £500 for higher rate taxpayers)        

  • Basic Rate                               20%                             
  • Higher Rate                             40%                            
  • Additional Rate                        45%                              

The tax rate on dividends over £5000

  • Basic Rate                                     7.5%
  • Higher Rate                                  32.5%
  • Additional Rate                             38.1%

HMRC have advised that if you are in receipt of dividends between £5000 and £10000 then you will need to advise HMRC by contacting their helpline, asking HMRC to change your tax code or complete a Self Assessment Tax Return.

If you are in receipt of dividends over £10000 you will need to complete a Self Assessment Tax Return, if you do not normally complete a Tax Return you will be required to register by 5th October following the end of the tax year.

Contact:  Alison Jessop

Email: alison.jessop@everys.co.uk      

Tel: 01395 264384             

Disclaimer: This article is not intended to constitute legal advice.  For legal advice in connection with the above, please contact us directly.

      

                                                                    

                                                                                                                                               

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