Changes to the taxation of saving income

There are significant changes to the income tax rules from 6 April 2016 which affect the taxation of savings income.

From 6 April 2016, if you are a basic taxpayer you may be able to receive up to £1,000 in savings income tax free. Higher rate taxpayers will be able to receive up to £500.

Savings income includes the following:

•     interest from bank and building societies accounts

•     interest from credit union or National Savings and Investment  accounts

•     income from government or company bonds

•     interest distributions from authorised unit trusts

•     most types of purchased life annuity payments

As a result of this from 6 April 2016 interest will be paid gross rather than net which is the current position for most interest paid to individuals. Net payments are received after deduction of the basic rate of tax of 20%. Interest from ISAs is not included in your Savings Allowance (SA) because it is already tax free.

No action is required to claim the allowance. If the amount of savings income you receive is higher than the allowance, banks and building societies will provide details to HMRC and they will amend your tax code to collect any tax due. If you complete a Self Assessment tax return you should carry on doing this as normal.

Internet link: GOV.UK

For more information please do not hesitate to contact the team at Ward Williams Financial Services Ltd on 01932 830664 or by email on wwfs@wardwilliams.co.uk.

Auto enrolment success for small businesses

More than 90% of the first small employers required to put their staff into a workplace pension have now complied with the law.

Around 12,000 small and micro employers became subject to the new legal requirements last summer and the vast majority have put their eligible staff into a pension. For the small numbers that did not comply, the Pensions Regulator (TPR) used their powers of enforcement action.

Although compliance with the rules remains the norm, TPR has noted that smaller employers are more likely to leave things to the last minute and they are therefore more likely to receive a compliance notice which could lead to a fine.

Since the start of auto enrolment:

•    4,818 compliance notices have been issued

•    around half of these (2,596) were issued between October and December last year

•    a total of 1,594 £400 Fixed Penalty Notice fines have now been issued to employers

•    just over a thousand (1,021) Fixed Penalty Notices were issued in the last quarter of 2015

Compliance notices act as a warning and give employers a deadline to meet their duties and avoid a fine.

Internet link: TPR press release

For more information please do not hesitate to contact the team at Ward Williams Financial Services Ltd on 01932 830664 or by email on wwfs@wardwilliams.co.uk.

Year end tax planning

With less than a month to the end of the tax year there is still time to save tax for 2015/16. We have set out some points you may want to consider.

•    Review dividend payment timing - with new dividend tax rates and a £5,000 dividend allowance from 6 April 2016, the timing of dividends could make a difference to the tax charge.

•    Consider company car options - going forward for each tax year the taxable percentage increases 2% for each CO₂ emission band and the diesel 3% supplement which was expected to be abolished from April 2016 is now to be retained.

•    Review personal pension contributions to ensure annual allowances are being used effectively as from 6 April 2016 the annual allowance may be tapered for those with incomes over £150,000.

•    Defer capital gains by reinvesting in Enterprise Investment Scheme shares.

For more information please do not hesitate to contact the team at Ward Williams Financial Services Ltd on 01932 830664 or by email on wwfs@wardwilliams.co.uk.

 http://www.wardwilliamsfs.co.uk/news-and-events/detail.php?article_id=160