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Thursday April 6, 2017
The 2017/18 tax year has officially begun. While 6 April is an important day in the financial calendar for British taxpayers, this new tax year takes on added significance due to the raft of new measures that have now come into force. These measures are an accumulation of reforms previously announced under former Chancellor George Osborne. Now legislated, Britain’s newly reformed tax system has important implications for the way British investors manage their financial strategy.
For investors and private company shareholders, awareness of the key regulatory reforms is vital to ensure they have a tax efficient strategy well positioned to meet the opportunities arising from Brexit. The key legislative changes that have come into force include:
- The threshold for paying the higher-rate of income tax has risen from £43,000 to £45,000
- The amount that can be saved tax-free every year into an ISA has increased from £15,240 to £20,000
- Corporation tax has been reduced from 20% to 19%
- Landlords who are paying significant loan or mortgage interest payments will start to lose higher rate tax relief on these payments
- Non-UK domiciled individuals resident in the UK in at least 15 of the past 20 years will now be considered UK domiciled for income tax, capital gains tax and inheritance tax purposes
In recent years, alternative income tax-reliefs including the Enterprise Investment Schemes (EIS), Seed Enterprise Investment Schemes and Venture Capital Trusts have been growing in popularity. Since EIS was launched in 1993-94, 24,620 individual companies have received investment through the scheme and almost £14.2 billion of funds have been raised. With HMRC reporting that nearly eight in ten investors consider income tax relief to be a key driver when considering investment, demand for these schemes is set to increase.
Investors also need to be mindful of the implications arising from Brexit. The triggering of Article 50 by Prime Minister Theresa May and the release of the Great Repeal Bill white paper last week signal the beginning of Britain’s eventual withdrawal from the EU. In response, Asset Match has released a factsheet revealing what Brexit is likely to mean for investors, businesses and shareholders. Click here to download our Article 50 factsheet.