Managing your money – January 2016

In this month’s managing money blog:

Home buyers have saved money on stamp duty following the rule changes in December 2014. People are saving but they are reluctant to switch their savings accounts. And, we look at some of the tax and regulation changes that will come into effect in 2016.

Managing Money News – Home buyers benefit from stamp duty changes

Managing money properly has saved Home buyers  an average of £4,500 in stamp duty following changes to the band system in December 2014.

Our Altrincham mortgage advisor says that, according to Halifax, a person buying a property paid a total of £3,676 in stamp duty, based on the current average house price in England and Wales of £273,531.

Under the previous tax structure, a buyer would have paid £8,205 in stamp duty. 

Total stamp duty revenue rose by 16% between 2013/14 and 2014/15 to a new high of £7.5 billion.

London contributed 40% of all stamp duty revenues in 2014/15, compared with 13% of all property transactions.

Mark Jones, Director of Assured Wealth and Estate planning said:

“The changes made to stamp duty a year ago have helped many home buyers. Only those purchasing the most expensive homes are now worse off. 

“The failure to index the start point for stamp duty in line with house price inflation has dragged more buyers into the tax net in recent years.”

Stamp duty land tax on residential properties
Portion of property price

Stamp duty  Up to
£125,000 0%

£125,001 to £250,000  2%

£250,001 to £925,000 5%

£925,001 to £1,500,000  10%

Over £1,500,000   12%

Further stamp duty changes 

New rates of stamp duty that are 3% higher than the current bands will be introduced from 1 April 2016 on purchases of additional properties such as buy-to-lets and second homes. 

Mobile homes, caravans, houseboats and properties sold for less than £40,000 are exempt from the new rates. 

Similar changes have been announced to land and buildings transaction tax in Scotland.

Contact Assured Wealth and Estate Planning  today  about how stamp duty could affect you.

Managing Money Latest – Savers unlikely to switch accounts

Savers have accumulated an average of £16,917 but only 37% save regularly, a survey by AA Financial Services has found.

The results also show a mixed picture when it comes to managing money and shopping around for the best interest rates:

·   54% of people have never switched their savings account

·    25% change accounts whenever they see a better deal

·    19% swap when their introductory bonus comes to an end.

Michael Johnson, director of AA Financial Services, said:

“Savers who have never switched their savings account are likely to be missing out on valuable interest earnings from a higher-paying account.

“It’s becoming easier managing money and switch savings accounts yet many people leave their money in accounts that earn poor interest rates or are inflexible, making it difficult to withdraw money.”

Choosing a savings account
In order to get the best out of your savings account, consider the following:

What are you saving for?
If you need regular access to your money or will be able to reach your savings goal within a year, an instant access account may be the most suitable type of account.

If you can leave your savings untouched for longer, you could consider fixed term deposits, savings bonds or regular savings accounts. These products lock your money away for a set period – typically between 1 and 5 years – in return for a higher interest rate than many instant access accounts.

Your tax position
From April 2016 the first £1,000 of savings income (or £500 for higher rate taxpayers) will be tax-free. The government estimates that the personal savings allowance will mean that 95% of individuals will not pay tax on their savings.

Banks and building societies will stop automatically deducting 20% in income tax from the interest earned on savings.

Cash held in ISAs will remain tax-free and the annual limit for all ISA savings for 2016/17 will be £15,240.

Spread your savings
The Financial Services Compensation Scheme protects deposits up to £75,000 in regulated banks and building societies.

For joint accounts the protection is £150,000. You may want to consider transferring some of your money if you hold savings that exceed £75,000 in a single account.

Read the small print
Make sure you know when any fixed term rates or bonus periods end. You should also check withdrawal rules and fees in case you need to make an unplanned withdrawal.

Learn more about your personal financial planning.  

10 tax and regulation changes for 2016

2016 looks set to be a busy year in terms of tax changes. The new tax year, which begins on 6 April 2016, will see the bulk of the new rules, rates and thresholds come into effect.

Although April may seem far in the future, some of the changes may affect your financial planning for the 2015/16 tax year.

10 changes that come into effect on 6 April 2016
1. Dividend tax credit will be abolished and replaced with a £5,000 dividend tax allowance.

2. The personal allowance increases from £10,600 to £11,000.

3. The higher rate threshold increases from £42,285 to £43,000.

4. A new savings allowance to remove tax on up to £1,000 of savings income for basic rate taxpayers will come into effect. For higher rate taxpayers this will be £500.

5. Those who currently receive income from an annuity will have the right to assign the annuity in consideration for a lump sum or alternative retirement product.

6. The lifetime allowance for pension contributions reduces from £1.25 million to £1 million.

7. The investment limit for Premium Bonds increases from £40,000 to £50,000.

8. Rent-a-room relief increases from £4,250 to £7,500.

9. The employment allowance increases from £2,000 to £3,000.

10.  Eligible workers aged 25 and over will have to be paid the national living wage of £7.20 an hour.

Contact IFA Altrincham Assured Wealth and Estate Planning  today, to discuss your financial planning needs.

Important Notice

The way in which tax charges (or tax relief, as appropriate) are applied depends upon individual circumstances and may be subject to change in the future. ISA eligibility depends upon individual circumstances. 

This blog is solely for information purposes and nothing in this blog is intended to constitute advice or a recommendation. You should not make any investment decisions based upon its content. The value of investments can fall as well as rise and you may not get back the amount you originally invested. Our Altrincham financial planning team can help, just call 0161 464 9122

Whilst considerable care has been taken to ensure that the information contained within this blog is accurate and up-to-date, no warranty is given as to the accuracy or completeness of any information.

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