Tax season is a stressful time that often leaves one wanting to put their head in the sand. So much paperwork, looming deadlines and the constant changes and confusion surrounding doing your taxes are enough to scare anyone off, however, it is a necessary evil. Knowledge is power, so we have put together a list of some of the more important changes to personal tax that you should be aware of and may affect you directly.
Tax Free Personal Allowance Goes Up
The amount of money an individual can earn before being required to pay income tax is going up from ￡10, 400 to ￡11,000. Even better, the following year in 2017 it will rise again to
￡11,500. Any increase in this amount is a benefit to taxpayers and can almost be considered a pay increase because it will lead to more dollars in your pocket.
The Launch of the Personal Savings Allowance
Beginning on April 6th, individuals that claim a taxable income in the bracket of ￡17,000 to ￡43,000 will be eligible for a ￡1,000 tax-free allowance. This means up to ￡1,000 per year can be earned in savings income that is completely tax free. Higher income earners need not fret because for income earners in the ￡43,001 to ￡150,000 range they as well benefit from a personal savings allowance, however it is capped at ￡500.
Insurance Premium Tax Rise
Beginning on October 1st, 2016, the insurance premium tax will go up half a percent to reach the 10 percent mark. This will directly affect such things as car, home, pet and medical insurance. While this will only affect the average policy by a few pounds it is worth noting that this is the second time in a year the tax has increased.
Tax Returns Go Digital
In 2016 personal tax accounts will go digital, and for some require updating 4 times a year. In late 2015 this program was trialed with select taxpayers but we can expect a far wider roll-out in 2016, with all claimants being on a digital system by 2020. Everybody’s digital account will capture a range of personal information, including details on employment income, interest earned on savings and other information.
Maintenance Grants Are Replaced by Maintenance Loans
In September of 2016, maintenance grants will give way to the arrival of maintenance loans, which will provide students with more money, raising their yearly allowance to ￡8,000. However, the new program will require that maintenance loans be repaid by the student once they have achieved a yearly income of ￡21,000.
The above mentioned only highlights a few of the many changes that this tax year has brought with it, bringing in positive changes in some circumstances and some not so positive. Knowing the current tax program is critical, as it directly affects your financial well-being and filing accurate returns is of the utmost importance. Have no fear, just when you think you have it all sorted out a new tax year and new changes will be upon us.