Early Bird

Taking action early in the tax year allows your money to work harder - and out of the taxman’s reach - for longer.

The new tax year saw the introduction of a number of changes to taxation and savings. Faced with a tax system that seems to be ever more complicated, now might be a good time to review your plans, to understand what new opportunities exist and how any changes might affect you.


Individual Savings Accounts

April marked the 18th birthday of the ISA and saw the annual allowance boosted to £20,000 – an increase of over 30%. One in four adults now invest in an ISA, yet only 9% of ISA investors make full use of their allowance.


Also, 80% of subscriptions are deposited in Cash ISAs¹, despite the record-low rates on offer and the impact of rising inflation on the real value of cash. The full tax saving and investment benefits of ISAs can only be achieved by investing for the long term, so it makes sense to use your allowance early in the year to put your money to work.


Junior ISAs

The financial challenges facing young people have been well documented and are clear to us all. Only 34% of 25–34-yearolds now own a home, compared to 60% 20 years ago². University students will graduate with an average debt of £44,000³. The amount that can be invested for each child into a Junior ISA has increased to £4,128 for this tax year. As well as offering a helping hand, gifting to children can also help older generations with their estate planning.


Inheritance Tax

The nil-rate band will remain frozen until 2020/21, but the new tax year sees the phased introduction of the new residence nil-rate band, set at £100,000 per individual in 2017/18, but rising to £175,000 in 2020/21. The combined allowances mean that, from 2020/21, married couples with children could pass on up to £1 million free from Inheritance Tax, including the value of their family home.


The rules, which could have a significant impact on estate planning, are complex and not everyone will benefit. For instance, estates worth £2million or more will see the new allowance gradually tapered. However, the opportunity to make gifts of up to £3,000 each year remains unchanged, providing a way to give loved ones a financial boost and the chance to see them enjoy it.


Savings and dividend income

One Budget surprise was the decision to cut the tax-free dividend allowance from £5,000 to £2,000 from April 2018. It is still worth couples redistributing investments between them to maximise their allowances but transferring assets to make the best possible use of ISA and pension allowances may be more important.



The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.



To receive a complimentary guide covering Wealth Management, Retirement Planning or Inheritance Tax planning, contact Spencer Holliday, Chartered Financial Planner at Irongate Wealth Management on 01386 291020 or 07896 020803 or by email spencer.holliday@sjpp.co.uk





¹ HMRC, September 2016 ² Office for National Statistics, 2015 ³ Sutton Trust, April 2016



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