Archive for March, 2016

Tax Winner or Loser? The Devil Is In The Detail . . .

Posted on: March 21st, 2016 by nwp_admin No Comments

Some of the main headlines from last week’s Budget may have been about the Sugar Tax and the proposed change to Personal Independence Payments, but there was a lot more “under the hood” to take note of for taxpayers.

The Chancellor increased the higher rate income tax band from £42,375 to £45,000 and increased the personal allowance from £11,000 to £11,500 – a boost, according to George Osborne, for around 31m UK taxpayers. 

More surprising was the announcement that capital gains tax will reduce from 28% to 20% in April. However, this excludes residential property, which is where the majority of people make their largest gains. This is another blow to second home-owners and buy-to-let landlords, following the increases to stamp duty land tax announced in the last budget. Nevertheless, it will allow investors sitting on large gains in their portfolios to realise them at a lower rate.

The situation was a little more complex for the self-employed. Those operating limited companies will receive a benefit from lower rates of corporation tax. These will fall from their current level of 20% to 17% by 2020. The self-employed will also see an annual tax cut of over £130 following abolition of Class 2 National Insurance contributions, though changes are planned to class 4 contributions in order to ensure that benefits entitlement is retained.

The Chancellor also announced a raft of savings incentives. The ISA allowance will rise from £15,240 in the 2016/17 tax year to £20,000 in 2017/18 for all investors. The Junior ISA allowance will remain at its current level of £4,080. At the same time, the Chancellor also announce the launch of a ‘lifetime Isa’ for those aged between 18 and 40.

Up to £4,000 a year can be invested alongside an existing Isa (subject to the overall £20,00 limit) and investors will receive a 25% boost on their annual contribution from the Treasury up to the age of 50. The proceeds from the Lifetime ISA can be put towards a first home with a value of up to £450,000 or set aside for retirement from age 60. Investors can use the money for other purposes, but they will lose the government contribution and associated growth, plus be subject to a 5% surcharge. Many saw the death-knell for pensions in the new boost for Isas, but for the time being, they remained untouched.

Budget 2016 Boost For Savers

Posted on: March 16th, 2016 by nwp_admin No Comments

Chancellor George Osborne has announced a raft of Budget 2016 measures to encourage saving for old age.

The annual ISA limit is to rise from £15,000 to £20,000, there will be a new “lifetime” Isa for the under-40s, with government putting in £1 for every £4 saved and there will be a new state-backed savings scheme for low-paid workers, worth up to £1,200 over four years.

The Money Advice Service, which has provided financial advice to consumers since 2010, is to also be abolished.

Meanwhile, some changes announced last year come into effect next month meaning UK savers will see radical change to the way their nest-eggs are taxed.

Anyone who earns interest on a savings or current account will no longer have 20% tax automatically deducted by their bank or building society.

They will instead be subject to a new Personal Savings Allowance (PSA), allowing them to earn up to £1000 a year tax-free.

As a result of the changes – announced in last year’s Budget – the government says that 95% of us will no longer have to pay any tax on savings.

In total, individuals will benefit by more than £1bn – the cost to the Treasury in 2016/17.

Basic rate taxpayers (20%) will be allowed an annual income of £1,000 in interest before they pay any tax. Those on the higher rate (40%) will have an allowance of £500 in interest.

Those on the top rate (45%) will have no allowance at all.

In the meantime those who earn less than £17,000 (including their savings income) will not have to pay any tax at all.


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Spring Brings Mortgage Green Shoots For Borrowers

Posted on: March 1st, 2016 by nwp_admin No Comments

There could be some welcome cheer for house buyers this Spring with signs that the mortgage market is opening up for borrowers with small deposits.

The range of mortgage products on offer is the widest for nearly eight years, with lenders increasingly willing to compete for riskier business.

According to Moneyfacts, the average two-year fixed-rate mortgage rate for buyers with a 10% deposit has fallen below 3%  for the first time since the Credit Crunch and there are now 845 products on the market for those seeking 90% loan-to-value.

The launch of schemes such as Help to Buy, which allows people to get on or move up the property ladder with deposits as low as 5%, has helped to boost competition between lenders at the low deposit end of the market.


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