The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald

The latest Clay Shaw Butler Money Matters column from the Carmarthenshire Herald.
By Mark Jones, director of Carmarthen-based Clay Shaw Butler chartered accountants and business consultants.

Our review of Chancellor Philip Hammond’s first (and last) Autumn Statement started last week with personal taxation changes.
We dealt with some of the issues about personal allowances and tax bands.
This week, we continue to focus on the changes to personal taxation, before we launch into the business tax issues next week.
Tax on savings income:
Savings income is income such as bank and building society interest.
Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000.
However, the rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income) exceeds the starting rate limit.
In addition, from 2016/17 the Savings Allowance (SA) applies to savings income.
Income within the SA is taxed at 0% (the 'savings nil rate'). However, the available SA in a tax year will depend on the individual's marginal rate of income tax.
Individuals taxed at up to the basic rate of tax will have an SA of £1,000. For higher rate taxpayers, the SA is £500 whilst no SA is due to additional rate taxpayers.
Individual Savings Accounts (ISAs):
The overall ISA savings limit is £15,240 for 2016/17 but will jump to £20,000 in 2017/18.
Lifetime ISA:
A new Lifetime ISA will be available from April 2017 for adults under the age of 40.
Individuals will be able to contribute up to £4,000 per year and receive a 25% bonus from the government.
Funds, including the government bonus, can be used to buy a first home at any time from 12 months after opening the account, and can be withdrawn from age 60 completely tax-free.
The increase in the overall ISA limit to £20,000 for 2017/18 is partly due to the introduction of the Lifetime ISA.
There will therefore be four types of ISAs for many adults from April 2017 –
  • Cash ISAs 
  • Stocks and shares ISAs 
  • Innovative ISAs (allowing investment into peer to peer loans) and . . . 
  • The Lifetime ISA. 
Money can be placed into one of each kind of ISA each tax year.
The Money Purchase Annual Allowance will be reduced from £10,000 to £4,000 from April 2017.
The 'annual allowance' sets the maximum amount of tax efficient pension contributions.
The normal annual allowance is £40,000.
The Money Purchase Annual Allowance was introduced in 2015, to restrict the annual allowance to £10,000 when an individual over 55 has taken income from a pension scheme.
The government will consult on the detail of the further restriction now announced.
Foreign pensions:
The tax treatment of foreign pensions will be more closely aligned with the UK's domestic pension tax regime by bringing foreign pensions and lump sums fully into tax for UK residents, to the same extent as domestic ones.
Universal Credit:
Universal Credit is the new state benefit designed to support those on low income or out of work.
An individual's entitlement to the benefit is made up of a number of elements to reflect their personal circumstances.
Their entitlement is tapered at a rate of 65% where claimants earn above the work allowances.
The current taper rate for those who claim Universal Credit means their credit will be withdrawn at a rate of 65 pence for every extra £1 earned.
From April 2017, the taper rate that applies to Universal Credit will be reduced from 65% to 63%.
The Chancellor stated this will let individuals keep more of what they earn and strengthen the incentive for individuals to progress in work.
The government estimates that three million households will benefit from this change.
Next week, we will focus on business tax issues.

You can find out more about the Chancellor’s Autumn Statement on our website –

You can find out more about money matters on the Clay Shaw Butler website (under our news for business section) -
We have a strong and experienced team with great local knowledge all geared-up to helping you get the very best from your finances – whether that is as an individual or as a business.
We stay ahead of the game by putting great store by continual professional development for our staff.
With Investors In People status at Clay Shaw Butler, we care passionately about making sure our staff have all the tools they need to serve you, our customers.

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The team at Clay Shaw Butler are on Twitter. Look for @clayshawbutler. 


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