How the Budget 2017 announcements will affect your money

Much of the attention following the Budget has focused on the announced change in National Insurance rates for the self employed - before the subsequent u-turn a week later. Here we focus on some of the other key Budget announcements which could impact on your finances. We also give some ideas on how to make the most of the changes.

ISA solution to dividend allowance cuts

Since April 2016, we’ve all been able to receive £5,000 in dividends from shares before paying tax.   The Chancellor announced that this will reduce to £2,000 from April 2018

A basic rate taxpayer with dividend income of £5000 or more will pay an extra £225 in tax each year and a higher rate taxpayer will see an increase of £975.

One simple solution is to make use of your ISA allowances. By using the current year’s allowance of £15,240 and the new £20,000 ISA allowance from 6th April, it’s possible to shelter up to £35,240 from income tax and capital gains, more than £70,000 for a couple.

Married couples and civil partners can switch dividend producing investments between them to maximise each person’s tax free allowance.       

Window of opportunity for pensions

Those over 55 who have taken a taxable payment from their pension since April 2015, under pension freedoms have had the amount they (and their employer) can pay into a pension reduced from £10,000 to £4,000 from April 2017.

The new rules don’t come in until 6th April 2017, so those who want to maximise their pensions may want to take advantage of the higher allowance before the end of this tax year.

New National Savings Bond announced

A new three year savings bond from National Savings & Investment paying 2.2% will be available from April 2017. With a maximum investment of £3,000 per person, it will be available to over 16’s. It will be open to applications for twelve months from launch.

Inheritance Tax change from April

While there were no new announcements in the Budget, the 6th April will see the introduction of the new £100,000 tax free allowance, available to those passing on a property that was once their main home, to direct descendants. There are special provisions for those that have downsized or sold their house to move into residential care. The rules are complex, with a number of traps for the unwary. Getting the right advice can help you make the most of the new rules.    

Buy-to-let squeeze

The fact that there were no new announcements impacting buy to let investors will come as a relief to many. The new rules on the gradual phasing out of higher rate tax relief on mortgage interest will start to bite from April 2017.

Getting the right advice can help you make the most of the changes. 

To discuss your plans contact your local Agent or call 0808 278 3489 and we'll put you in touch with your personal Financial Adviser.

NFU Mutual Financial Advisers advise on NFU Mutual products and selected products from specialist providers. We'll explain our services and charges.