A new tax year – What you need to know.

6 April sees the start of the new tax year and with it a whole host of changes to income and savings.

Here’s a quick look at some of the changes.

State Pensions

The most significant changes will be to pensions as the old Basic and Additional state pensions are scrapped.  Anyone reaching state pension age from today will qualify for the new single flat rate payment of £155.65 a week but this sum could vary depending on your National Insurance contributions. To receive the full amount you will need 35 qualifying years, the amount will vary by £4.44 per week for every year of contributions. Anyone with less than 10 years National Insurance contributions will get nothing.

Those who opted out of the State Second Pension will not be eligible for the full flat rate of £155.65, instead payments will be based on the total amount of NIC contributed over the years.

New personal savings allowance

Basic rate taxpayers will now receive a tax free allowance of £1,000 per year for savings interest, while higher rate taxpayers will pay tax on interest savings over £500.

Rise in Personal Allowance

The new personal allowance before tax is payable rises by £400 to £11,000, and higher earners can earn up to £43,000 before the 40% tax bracket is reached.

Cuts to Capital Gains

Higher rate taxpayers will see a cut to the amount of tax paid on the sale of assets from 28% down to 20% and lower rate taxpayers will see a reduction to 10% from 18%. The annual amount of £11,100 that can be made before tax will remain the same.

Changes for Landlords

The 10% Wear and Tear allowance for landlords with furnished buy-to-let properties is being replaced with tax deductions only for any actual refurbishment and repair costs. Up until now the wear and tear allowance has been deducted from rental income before tax on profit was paid regardless of any refurbishment costs being made. This new rule does not apply to holiday lettings.

Rent- a –room allowance increase

This is the first rise we have seen in the rent-a-room allowance since 1997, the new allowance is £7,500, an increase of £3,250. This means landlords can now earn up to £144 per week tax free for taking lodgers in their own home.

DTE have produced a handy 2016/17 Tax table guide outlining new tax rates. Click here to download a copy.

If you have been affected by any of the recent tax changes and would like further help or advice please contact a member of our tax consultancy team on 0161 767 1200 or email