As usual, the coming year will see plenty of shifts in the financial planning landscape for all of us. Changes come about largely as a result of new legislation or policy introductions and, whilst there isn’t anything quite as dramatic as 2015’s introduction of pension freedoms on the horizon, there’s still plenty to look out for in 2016. Here are three of the biggest tax changes in 2016 you may wish to familiarise yourself with.
Digital tax accounts
Digital tax accounts are coming… albeit on a fairly slow rollout at the moment! The plan from HMRC is that everyone who fills out a self-assessment tax form will do so digitally by 2020. Currently, the government is only asking wealthy taxpayers with multiple income sources to use the system, but early 2016 will see the next batch of ‘trialists’ given accounts and completing returns. Watch out for an envelope through the post (or an email!) from HMRC, letting you know that you’re one of the lucky new crop.
Second home stamp duty is introduced
Announced during the Autumn Statement, the extra stamp duty on second home purchases is being rolled out quickly and will be in place and ‘live’ from April 1st 2016. Those purchasing a second home, or buy to let property will need to pay 3% above whatever their normal rate of stamp duty would have been, had the purchase been of a primary residence. Whilst this may seem like a relatively small increase, the difference between purchasing pre-April 1st and post-April 1st can be significant. Landlords who are planning further property investment in 2016 may particularly wish to check or to consult us on how their taxation will be affected.
Dividend taxation changes
The new rates of dividend taxation come into force at the start of the new financial year on April 6th 2016. Company owners, who may pay themselves partially through dividends, may be particularly affected as the change introduces a new £5,000 tax free rate with new bands of 7.5%, 32.5% and 38.1% above this for basic rate, higher rate and additional rate taxpayers respectively. If you do currently receive a substantial amount of income from dividends then now is a good time to review your income plans with your financial planner or accountant.