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What's changing for the new tax year 2017/18?
Published 6 April 2017 by Kyri Levendi
Find out how the changes to the new tax year will affect your budget.
Today (6 April) marks the start of the new tax year 2017/18. The start of the Government's financial year is when some of the changes featured in the Budget 2017 speech and previous statements start to kick in.
To make sure you know how this will affect your budget, we're taking you through what's changing for the new tax year 2017/18.
The Personal Allowance is the annual amount you can earn before you pay tax. From 6 April 2017, this is rising from £11,000 to £11,500.
That means you'll have to earn £500 more a year to start paying tax. However, if you're aged 25 or over your wage is liking to increase from 1 April 2017. This is because the National Living Wage will rise by 30p an hour to £7.50.
The National Minimum Wage has also increased to £7.05 for those between 21 and 24 years from this April.
The Individual Savings Account (ISA) allowance is going up from £15,250 to £20,000 from today. You can choose how to invest your money in an ISA – either in cash or in stocks and shares.
You won't pay tax on an income from an ISA or on any capital gain. That means you can take all of your money out in a lump sum or draw a regular income, without paying any tax.
You can find out about using cash ISAs to save money here.
New Lifetime ISA
You can apply to open a new Lifetime ISA (LISA) from 6 April 2017. A LISA is a savings product designed to help people buy their first property or retire.
You can pay a maximum of £4,000 into a LISA each year. The Government will add a 25% bonus at the end of the first tax year, up to a maximum of £1,000. From April 2018, the Government will pay this bonus monthly.
You cannot open a LISA if you're over the age of 40. You can read more about how a Lifetime ISA works in our blog.
Child Tax Credit
There will be cuts to future Child Tax Credits from today. You will no longer be able to get the family element of the payment worth £545 a year, if you have a newborn baby after this date.
You won't see any change if your first child was born before 6 April 2017. On top of this, you will no longer be able to claim Child Tax Credit if you have a third or fourth child after today. That means you can only receive Child Tax Credit for two children.
This will also apply to people claiming Universal Credit.
The Government is reducing the Universal Credit 'taper rate' to 63% from 10 April 2017. This means that for every £1 you earn over your work allowance, you'll be able to keep 37p instead of 35p.
In other words, you'll be able to keep more of our income before your benefits are reduced.
Find out how to cope if you're moving to Universal Credit in our blog.