New Year, New Opportunities!

With the festive season out of the way, the early morning ritual begins again with earnest and we look ahead to what 2018 may hold.

A Winter Olympics, a World cup and a royal wedding to name a few of the exciting things to look forward to, 2018 is already shaping up to be a good year!

So let’s also highlight a few financial planning areas not to be missed this year, to ensure your 2018 shapes up to be the best one yet!

Income tax thresholds – From 6^th April 2018 the personal allowance for income tax (everyone has it!) is going up to £11,850 along with the higher rate threshold going up to £46,350.

These increases are a further step towards the pledge from the current Government that the personal allowance and higher rate income tax thresholds will have risen to £12,500 and £50,000 respectively, by the end of the current parliament in 2020.

With the zero rate dividend rate allowance dropping from £5,000 to £2,000 at the same time, it’s another year to make sure your remuneration planning is up to date.

Capital Gains Tax exemption – This will increase to £11,700 per person from 6^th April and is often one attractive allowance that can get overlooked.

This is a use it or lose it exemption and if you have a growth orientated investment portfolio, there may be the opportunity to take or recycle profits within the portfolio, to utilise the exemption and avoid a nasty tax surprise down the line.

Spouses can move investments between themselves as well to maximise this opportunity and the long term benefits of planning in this area can be greater than you might think!

Residence Nil Rate Band – This exemption arrived in April 2017 and is now more widely understood and applied within financial planning and is worthy of a reminder here. The exemption is aimed at minimising the impact of Inheritance tax (IHT) due to the significant rise in house prices over recent years.

Whilst the normal IHT exemption of £325,000 remains intact, the new Residence Nil Rate Band (RNRB) started at £100,000 in April 2017 and is in addition to the £325,000 exemption. The new allowance will increase to £175,000 by April 2020, thus providing a total potential exemption of £500,000.

The rules for qualification need to be considered carefully, but if property is passing to direct descendants and the overall estate is not greater than £2m, the new exemption could save a decent level of IHT!

These planning areas are just a few of the opportunities we will see in 2018, whether you will be glued to the TV watching sport or a royal wedding (something for everyone there!), it’s also an opportunity to ensure you have a strategic financial plan for your future.

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