April is upon us and along with sunshine and showers, it brings with it a host of financial implications. Philip Hammond’s recent Budget may have been quite low key but other changes had already been announced so here’s a round up of what you need to know:
ISA – The amount that can be saved in a tax-free Individual Savings Account is jumping from £15,240 a year to £20,000. Great news for those with cash to stash!
Lifetime Individual Savings Account (LISA) – We’ve covered this in detail in a previous blog but it finally launches in April for those aged between 18 and 40. You’ll be able to save up to £4,000 a year, and the government will add a 25% bonus as long as the money is used to buy a home or once you reach 60.
Buy-to-let – There are lots of complex changes for people with buy-to-let mortgages in April. Currently, landlords can deduct mortgage interest and other finance-related costs from their rental income before calculating tax liability. But this is being phased out so some could see their tax bill soar.
Personal allowance – The amount you can earn before paying income tax will go up to £11,500 (from £11,000) and the basic rate limit will increase to £33,500. The threshold for the higher rate will go up from £43,000 to £45,000 in England and Wales (the rules in Scotland are slightly different).
The National Living Wage – This goes up from £7.20 to £7.50 in April, for those aged 25 and over.
National insurance – Alas, the government giveth with one hand and taketh with the other. If you’re an employee, you currently pay 12% NI on all your earnings above £8,060 a year until your earnings reach £43,000, when it drops to 2% on earnings above this limit. From 6 April, you will still pay 12%, but not until you earn £8,164 a year. This means that if you are earning £25,000 a year, your NI will fall from £2,033 to £2,020, but if you earn £50,000, your contribution goes up from £4,333 to £4,520.
State pension – This rises by 2.5% in April. The new flat-rate pension will see weekly payments increase to £159.55 from £155.65, while the old state pension will rise to £122.30 from £119.30. The higher flat-rate is given to those with at least 35 years of NI contributions, so many people, including women who stayed at home to raise families, will miss out here.
Probate fees – OK, technically this happens in May, but it’s close enough. Those with an estate value of less than £50,000 will be exempt, meaning 58% of estates will have nothing to pay. However, instead of the current flat fee of £215, a new tiered system comes into play, meaning the fee will be £300 on estates of £50,000-£300,000; £1,000 for estates of £300,000-£500,000; £4,000 for estates of £500,000-£1m; £8,000 on estates over £1m, and £20,000 on estates exceeding £2m.
Child Tax Credits – Third (or subsequent) children born after April will no longer qualify for Child Tax Credit, which can be more than £2,000 per child. The family element of child tax credits, worth £545 per year, will also be abolished.
Oh, and in case you hadn’t already realised, your pint of beer has gone up by 2p, your bottle of wine has risen by 10p and your whisky costs 36p more. Bad times indeed.
If you’d like to know more about what these changes mean for you personally, we can help. Get yourself one of the best financial advisers around (even if we do say so ourselves!) by giving us a call.
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