6^th April marks the start of the new tax year 2017-18 in UK.  Below are the main changes you should be aware of.

• Income Tax

The Personal Allowance is the annual amount you can earn before you pay tax. From 6^th April, the amount is rising from £11,000 to £11,500.  The change in the Personal Allowance means that the basic rate taxpayers will take home an extra £100 a year.

• The National Living Wage

The National Wage is to rise to £7.50 per hour from April this year in line with Chancellor Philip Hammond’s Spring Statement. The national minimum wage will also increase:

Apprentices – from £3.40 per hour to £ 3.50 per hour

16-17 year olds – from £4.00 per hour to £4.05 per hour

18-20 year olds – from £5.55 per hour to £5.60 per hour

21-24 year olds – from £6.95 per hour to £7.05 per hour

• Corporation Tax

There will be a further reduction in Corporation Tax, which is currently charged on profits at 20%. It was announced previously that from 1^st April 2017 the corporation tax would be reduced to 19% and from 1^st April 2020 again to 17%. This measure will benefit over a million companies, large and small. It will also ensure that UK has the lowest corporation tax rate in the G20.

• National Insurance Contributions

Currently, the self-employed may have to pay both Class 4 and Class 2 NICs. The current rates are:

Class 4 NICs at 9% are paid on profits between £8,060 and £43,000

Class 2 NICs are paid on profits of £5,965 or more

From 2018, Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019.

• Individual savings account (ISAs)

The amount you can save tax-free in an ISA is increasing from £15,240 to £20,000 from 6^th April.  Your allowance can be invested into a Cash ISA, Stock and Shares ISA or an Innovative Finance ISA. On the 6^th April, the new Lifetime ISA was launched for those aged over 18 but under 40.  This will allow you to save up to £4,000 a year to put towards your retirement or buying your home.  You will also receive a 25% bonus from the Government worth up to £1,000 each year until you are 50.  You can choose between either a Cash or Stocks and Shares Lifetime ISA and contributions will count towards your overall annual ISA allowance limit.

• Capital Gains Tax (CGT)

The tax-free allowance for Capital Gains Tax a levy on the profits made from the sales of assets will increase from £11,100 to £11,300.  Whether you need to pay CGT and the actual amount will depend on the type of assets you are selling and your tax situation.