With around a week until the start of a new financial year, there are a number of changes to tax rates and allowances that may affect your personal finances.

Here's a summary of 5 main changes to keep in mind as you plan for the year ahead.

Income tax

The personal allowance is rising to £11,850 across the UK, and the higher rate threshold is increasing to £46,350 for England, Wales and Northern Ireland.

In Scotland, 5 income tax bands will apply. The higher rate is rising to £43,430, and 2 new bands have been introduced - a starter rate from £11,850 to £13,850, and an intermediate rate from £24,000 to £43,430.

Dividends allowance

If you take any income from dividends you could see a change in the amount of tax you pay, as the tax-free dividend allowance is reducing from £5,000 to £2,000.

Beyond this, you'll pay tax on dividends at 7.5% if you're a basic rate taxpayer, 32.5% for higher rate, and 38.1% for additional rate.

Residence nil-rate band

While the inheritance tax (IHT) threshold remains unchanged at £325,000, the residence nil-rate band is rising from £100,000 to £125,000.

The residence nil-rate band enables eligible people to pass on the family home to direct descendents and potentially save on death duties.

It can be added to the basic IHT threshold under qualifying conditions.

Devolved property taxes

If you're planning to buy a home, the tax you pay will vary depending on which part of the UK you're in.

First-time buyers in Scotland pay nothing on the first £175,000 from June 2018 (subject to consultation).

In Wales, land transaction tax replaces stamp duty, with a threshold of £180,000 for all homebuyers. This is in effect from 1 April 2018.

For England and Northern Ireland, stamp duty rates remain the same, with first-time buyers exempt from property tax on homes worth less than £300,000.

Junior ISA limit

Those saving for their child may be able to benefit from slightly increased tax-free savings in a Junior ISA, as the limit is rising to £4,260. For adult ISAs, the allowance remains at £20,000.

Contact us to discuss your personal tax planning.

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