Nine April 2016 tax changes you need to know about
April 6 – the start of the 2016-2017 tax year is a big day for tax, with several new measures covering pensions and earnings affecting landlords.
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 new wear and tear or replacement allowance for all landlords.
The 3% stamp duty surcharge for buy-to-let or second homes worth more than £40,000 in England and Wales also comes into force.
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 effect is from April 1.
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Tax is an aspect of residential property investment which is often overlooked. There are many twists and turns to consider at all levels, whether for income tax, capital gains tax or inheritance tax. It is vital to get the ownership structure right and ensure that all tax relief, allowances, and claims are made.