Personal Tax changes with effect from 6th April 2016

19/02/2016
Personal Tax changes with effect from 6th April 2016

Personal Savings Allowance

Since 6th April 2015 there has been no tax on bank interest if your taxable income is less than £15,600. From 6th April 2016 sees the introduction of the Personal Savings Allowance. 95% of people will not have to pay tax on the first £1,000 of interest earned on their savings (£500 for higher rate taxpayers).

This means that:

  • If your taxable income is less that £16,800 you won’t pay tax on the interest earned on your savings.
  • People with taxable income of less than £42,700 a year receive the first £1,000 of interest tax-free.
  • People with taxable income between £42,701 and £150,000 a year receive the first £500 of interest tax-free.

From 6th April 2016 banks and building societies will stop deducting 20% in income tax from the interest earned on your savings income.

Wear & Tear Allowance

From 6th April 2016 the wear & tear allowance will be replaced with a new system that only allows relief on replacing furnishings in their property. There is no relief for the initial cost of the furniture only when the items are actually replaced.

Rent a room relief

Rent a room relief increases from £4,250 to £7,500 per year from 6th April 2016. Rent a room relief is available to home owners who let furnished bedrooms in their main residence.

Personal Allowances

From 2016/17 onwards the personal allowance will be the same for all individuals regardless of their date of birth – see table below:

personal allowances table 2016/2017

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