A new tax year in the UK has started and we thought that it would be prudent to outline some of the major changes introduced to the tax regime for this tax year which you should be aware of.
Personal allowances - the personal tax-free allowance will be £11,500. The threshold for the higher rate band will be £45,000, excluding Scotland, where it remains at £43,000.
Dividend allowance - the tax-free dividend allowance remains at £5,000, but this will reduce to £2,000 from April 2018. The reduction measure is aimed at limited company director shareholders but could also affect individuals with large portfolios of shares.
Capital Gains Tax - for this tax year, the allowance has increased to £11,300 for individuals and to £5650 for Trustees.
Corporation tax - is set at 19% with the promise that it will reduce to 17% by 2020.
Qualifying Recognised Overseas Pension Schemes (QROPS) - A 25% charge on transfers to QROPS from 9th March 2017 is in force. This targets those seeking to reduce the UK tax payable by moving their pension wealth to another jurisdiction. Expatriates residing in the European Economic Area including Gibraltar (EEA) and where the transfer into a QROPS is based in the EEA, the charge will not apply.
ISAs - For UK residents, the ISA limit is now £20,000. Non-UK residents cannot add to or open an ISA, but they may retain existing ones. However, income and gains from ISAs are taxable in Portugal.
New Residence Nil-Rate Band - The new residence nil-rate band comes into force. The measure adds an additional £100,000 inheritance tax (IHT) allowance on to the current nil-rate band of £325,000. The residence nil-rate band is due to rise to £175,000 by 2020. The rule can apply to any one home included in the estate as long as it was lived in by the deceased at some stage before the death. The home can be an overseas residence.
The allowance will still apply even if the property is sold. Furthermore, any outstanding mortgage is deducted before applying the allowance. The property must be left to direct descendants to benefit from the allowance.
As ever, if you wish to consult us on any aspect above, please do not hesitate to contact us.
Private Fund Management is an authorised representativeof Abana Lda. Abana Lda is authorised and regulated by the Insurance andPension Funds Supervisory Authority in Portugal (“ASF”) with registrationnumber 412378472 and by the Financial Conduct Authority (“FCA”) number 597069.