Year End Tax Planning
Guide to your 2015-16 year end tax review
To help you plan for the end of this tax year we have put together a comprehensive guide for you. Our year end tax planning guide covers a range of topics including information about changes to tax on dividends, Gift Aid, tax relief for travel, payroll changes and much more.
Hidden Tax Rises
The Government claims it needs to raise funds to reduce the national deficit, and to supply the security services with the resources they need to fight terrorism. But the Chancellor limited the scope to raise mainstream taxes by writing into law his pre-election promise not to raise the rates of Income Tax, VAT or employee and employer National Insurance.
So tax revenue must be collected in less obvious ways. Duties are a good way to do this, as they tend to be imposed in circumstances which are difficult to avoid or on products that are addictive. For example, the duty on insurance policies was raised from 6% to 9.5% on 1 November 2015 and hardly anyone noticed.
This guide explains these new tax changes in detail for you. Some of the changes are mentioned briefly below but please download the complete guide at the bottom of the page for full details.
New Tax on Dividends
A new tax on dividend income received by individuals will be imposed from 6 April 2016. This may mean you pay more tax on your dividend income, particularly if you receive most of your income as dividends paid out of your own company.
Payroll Changes
There are a number of changes to payroll taxes and employee pay arriving in 2016/17. From 6 April 2016 no employer’s NIC will be due on the earnings of apprentices who are aged under 25, up to £827 per week. The pay of all employees aged under 21 is also free of employer’s NIC, whether they are apprentices or not, as long as their pay falls under the same threshold.
Letting a Room
If you earn a little extra money by letting a room in your own home to a lodger or guest, that income can be tax-free if the total is within the rent-a-room relief of £4,250. If the rent you receive is more than that you should declare the income and expenses on your tax return. From 6 April 2016 the rent-a-room allowance increases to £7,500.
Additional Stamp Duty
Buy-to-let property investors are blamed for rising house prices, which lock ordinary people out of the housing market. This may not be fair, but the Government wants to discourage individuals from buying and holding homes to let. Changes are coming after 1st April 2016.
Auto Enrolment
Over the next two years all employers, including individuals who employ domestic staff, will be required to enrol their eligible employees into a qualifying pension scheme. This is called pension Auto-enrolment.
State Pension Changes
People who reach State Pension Age (SPA) on or after 6 April 2016 will receive the flat-rate (or single tier) state pension. The amount won’t be the same for everyone, so if you are due to reach SPA in the next ten years, you should request a pensions forecast to help assess your total income on retirement.
