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2015-16 tax year: What you need to know

New rules, allowances and tax thresholds
wake up

The 2015-16 tax year starts on Monday April 6, with new rules, allowances and thresholds. Find out what’s changed and how you might be affected.

2015-16 Isa allowance

You have until Sunday April 5 to invest your 2014-15 annual Isa allowance of £15,000. This can be all cash, all stocks and shares or any combination of the two. This allowance can’t be carried forward to the next year. You get a new annual Isa allowance of £15,240 in 2015-16.  

In 2015-16, you can make withdrawals from this year’s Isa and top it up back up again to the £15,240 limit without losing tax-free allowance. However, this rule won’t be introduced until autumn.

From April 6, you are permitted to transfer funds from an existing Child Trust Fund to a Junior Isa. The annual allowance for a Junior Isa increases to £4,080.     

The Which? Money Compare tables let you search hundreds of savings accounts and cash Isa deals from providers large and small so that you can find a great home for your nest egg. We also combine this with our unique customer scores that show you how well the provider you pick will treat you in the long run.

Marriage Allowance

Personal allowance is the amount of income you can receive before paying tax. For most people, the 2015-16 allowance is £10,600.

This year, married couples and civil partners can transfer up to £1,060 of ‘unused’ allowance between them. The partner whose income is below their allowance can transfer up to £1,060 of the excess, as long as their spouse is a 20% taxpayer. This could give the higher earner a personal allowance of up to £11,660 and save them up to £212 a year in tax.

This new tax break is called ‘Marriage Allowance’. It’s different from Married Couple’s Allowance, which is only for those born before April 1935.  

Pension freedoms

April 2015 sees the relaxation of pension rules, so that those with a defined contribution (DC) pension ‘pot’ can withdraw as much as they like from this once they reach the age of 55. 

As before, the first 25% is tax-free, but now any additional withdrawal will be taxed as extra income for the year, at normal rates rather than a prohibitive 55%.

Other pension rules have also been lifted, such as the 55% tax on pension funds left invested on death and restrictions on joint-life annuities, so that they will now be able to be paid to any nominated beneficiary if you die before age 75.

For more details, see our all-inclusive guide to pensions and retirement.

Tax bands and thresholds for 2015-16 

Tax bands for 2015-16 remain largely unchanged, although the 10% savings band has been replaced with a £5,000 nil-rate band for those with low incomes. 

For 2015 tax returns, relating to income received between April 2014 and April 2015, the old 2014-15 allowances and thresholds apply. 

For income received after 5 April 2015, the new allowances and thresholds should be used. The table below gives both.

Tax basics explained
  2014-15 2015-16 2016-17 2017-18
Basic rate income tax (20%) £0-£31,865 (after allowance) £0-£31,785 (after allowance) £0-£31,585 (after allowance) £0-£32,300 (after allowance)
Higher rate income tax (40%) Over £31,865 (after allowance) Over £31,785 (after allowance) Over £31,585 (after allowance) Over £32,300 (after allowance)
Additional rate income tax (45%) Over £150,000 Over £150,000 Over £150,000 Over £150,000
Personal allowance (tax-free) £10,000 £10,600 £10,800 £11,000
Income limit above which you start to lose personal allowance (at rate of £1 for each £2 you earn above limit) £100,000 £100,000 £100,000 £100,000
Age-related personal allowance (born before 6 April 1948 ) £10,500 N/A N/A N/A
Age-related personal allowance (born before 6 April 1938) £10,660 £10,660 N/A N/A

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