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Personal tax changes

A number of new rates and allowances as well as some changes to tax rules were introduced on 6 April 2017.

Here is an overview of some of the main changes for 2017/18 affecting personal finances.

Income tax

The personal allowance is £11,500 for 2017/18 and the basic rate limit is £33,500. The basic rate limit for Scotland is £31,500.

Inheritance tax

An additional residence nil-rate band is available to those passing on a main home to a direct descendant.

The allowance starts at £100,000 and is an addition to the existing tax-free inheritance tax allowance of £325.000. It will increase by £25,000 each tax year until it reaches £175,000 in 2020/21.

Capital gains tax

Capital gains tax exemption for individuals is £11,300 and £5,650 for trusts.

After this, gains are taxed at the following rates:

  • basic rate taxpayers – 10%
  • higher and additional rate taxpayers – 20%.

Residential property and carried interest are taxed at 18% (basic rate) and 28% (higher and additional rate).

Residence and domicile

Anyone who has been a resident in the UK for 15 of the last 20 tax years will be considered domiciled for tax purposes. A person will become domiciled on the 16th year.

The remittance basis of taxation will no longer be an option and that a person will no longer be able to become a non-dom on a permanent basis.

The deemed-domicile status replaces the permanent non-dom status. This will include years of residence while the individual is under the age of 18.

Contact us to discuss your personal tax planning for 2017/18.