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Tax changes which may affect you (Spring Statement 2018)

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There have been some important tax changes this year. They won’t necessarily amount to a lot of money but they may well require action:

  1. From the 6th April 2018 the rates and bands of tax that apply to Scottish taxpayers’ income have changed significantly. There are new Starter and Intermediate rates. The Higher and Additional rates will increase to 41% and 46% respectively.
  2. (For the whole of the UK) From the 6th April 2018 the tax-free dividend allowance was reduced from £5,000 to £2,000. This will mainly penalise those in owner-manager companies or with significant share portfolios (not ones held in funds or ISAs and Pensions).
  3. Any savings income above £1,000 for basic rate payers, and £500 for higher rate payers, will now be subject to tax at an individual’s relevant rate. It is our understanding that income generated from cash on deposit will result in tax codes being automatically adjusted.
  4. Income from certain investment funds, which previously had basic rate tax deducted at source, will now be paid gross and may need to be declared on an annual tax return for anyone who pays tax. Non-taxpayers shouldn’t be affected.
  5. If you have cashed in an investment bond and enjoyed a “chargeable” gain it could result in a reduction in some of your income tax allowances – depending upon the size of the gain.

The main impact of all this is that from January 2020 you may need to start submitting tax returns if you don’t already do so. For example, if you receive an annual statement from an investment provider which includes an income declaration you’ll need to submit it as part of a return. This will apply to most of our clients. If you are unsure or need further help do contact us or we can discuss it at your next annual review.

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