Budget 2016 – Personal Tax | Wright Vigar

Budget 2016 – Personal Tax

 In News, Treasury Updates

The Personal Allowance will increase to £11,500, and the higher rate threshold will rise to £45,000 in April 2017

The Personal Allowance is the amount of income you can earn before you start paying Income Tax. From 2016 to 2017, there will be one personal allowance for all individuals regardless of an individual’s date of birth. This is currently £10,600 – it will already rise to £11,000 in 2016, and will now increase further to £11,500 in April 2017. The point at which you pay the higher rate of Income Tax will increase from £42,385 to £43,000 in 2016 and to £45,000 in April 2017.

These increases are to ensure progress is made towards the government’s commitment to raise the personal allowance to £12,500 and the higher rate to £50,000.

Cumulative changes to the personal allowance and higher rate threshold between 2015 to 2016 and 2017 to 2018 mean a typical basic rate taxpayer will have an overall cash gain of £180 and a real terms gain of £166. A typical higher rate taxpayer will have an overall cash gain of £442 and a real terms gain of £399.

Property and trading income allowances

From April 2017, a new £1,000 allowance for property income and a £1,000 allowance for trading income is being introduced. Individuals with property or trading income below £1,000 will no longer need to declare or pay tax on that income. Individuals with income above the allowance will be able to calculate their taxable profit by either deducting their expenses in the normal way or by simply deducting the relevant allowance.

This measure will be particularly good news for people who make occasional profits from, for example, selling goods online or renting out a garage or drive.

Recent Posts

Start typing and press Enter to search