By James Tanswell

The 6th of April is an important date to many for a number of reasons:

• It’s National Fisherman Day in Indonesia 
• It’s the day that ABBA won the Eurovision Song Contest in 1974
• It’s Raphael’s birthday (the 16th century Italian Renaissance painter, not the Teenage Mutant Ninja Turtle)

It’s also the first day of the brand-new tax year, which brings with it a long list of changes that you should know about. This article looks at the 10 most important changes to your personal finances, from your personal tax allowance all the way to your dentist bills.

1. Income Tax Allowance

The tax-free Personal Allowance is rising from £11,000 to £11,500.

This allowance is the amount you can earn before you are required to pay income tax. This has been raised as part of the Government’s plans to eventually increase the allowance to £12,500 by 2020. The increase is expected to save 20 million basic-rate taxpayers an estimated £100 per year.

For those in England, Wales and Northern Ireland, the higher-rate tax band is also rising, with a change from £43,000 to £45,000. The threshold for those living in Scotland will remain at £43,000 The higher-rate tax band is also expected to rise again by 2020, with Philip Hammond announcing an aim for a £50,000 threshold in the 2016 Autumn Statement.

2. National Insurance Contributions

New National Insurance Contribution (NIC) thresholds have been put in place for the 2017/18 tax year.

• Employees paying Class 1 NICs pay 12% on income between £157 and £866 per week
• Employees paying Class 1 NICs pay 2% on income over £866 per week
• Self-employed people paying Class 2 NICs pay £2.85 a week for profits over £6,025
• People paying voluntary Class 3 NICs pay £14.25 per week
• Self-employed people paying Class 4 NICs pay 9% on profits between £8,164 and £45,000
• Self-employed people paying Class 4 NICs pay 2% on profits over £45,000

Your NICs go towards state benefits and services, such as the NHS, unemployment benefits, sickness and disability allowances and the State Pension. Those making voluntary contributions to fill any gaps in their National Insurance record will see a 15 pence rise, as the Class 3 NICs rise from £14.10 to £14.25 per week.

3. ISA allowance limit

One of the bigger changes that you may have already heard about is the rise to the ISA (Individual Savings Account) allowance from £15,240 to £20,000.

There has been lots of ISA talk in the media recently, with products such as the Lifetime ISA being launched for the new tax year. July 2014 saw significant relaxing to both the ISA rules and the annual limits, and 2017/18 sees the largest allowance yet. £20,000 can now be placed in Cash, Stocks & Shares, Innovative Finance, Help to Buy or Lifetime accounts, or a combination of them all, with any interest or returns sheltered from taxation.

4. Lifetime ISA

The Lifetime ISA (LISA) was launched on the 6th of April 2017, and is targeted at members of the Millennial Generation who are saving money to buy a first home, or to use for their retirement. The key features of the LISA are:

• It is a savings and investment product for 18-50 year olds (only under 40s can open one)
• A maximum of £4,000 can be paid in per year (which will be taken out of your annual ISA allowance of £20,000)
• The Government will add a 25% bonus on any money saved
• It’s available in both a Cash and Stocks & Shares format
• It can only be used to buy a first home worth less than £450,000, or after the age of 60 without incurring penalties which is currently 25% of the amount withdrawn

There are other stipulations that must be navigated, but at its heart, the LISA is designed to be a versatile account that can help first-time buyers or encourage people to save for the future.

5. Marriage Allowance

The Marriage Allowance is rising to £1,150, from £1,100.

Whilst this is a relatively small change, the Marriage Allowance means that you can transfer up to £1,150 of your tax-free Personal Allowance to your husband, wife or civil partner if they earn more than you do.

The Marriage Allowance is available to couples who:

• Are married or in a civil partnership
• Have a higher earner who has an income between £11,501 and £45,000 (or £43,000 if they live in Scotland)
• Have a lower earner who has an income of less than £11,500

This could reduce the tax paid by up to £230 in the next tax year, making the £50 difference in allowance a fairly significant one for some.

6. Inheritance Tax (IHT)

A £100,000 allowance called the ‘Residence Nil Rate Band’ will be introduced for children inheriting a family home.

The current IHT Basic Nil Rate Band of £325,000 will stay the same, but the addition of a £100,000 allowance will mean that anybody leaving a primary family home to a child, or ‘direct descendant’ as HMRC label it, will effectively be able to pass on an estate worth £425,000.

The good news doesn’t stop there either. The allowance can be doubled up for couples, meaning that an estate of up to £850,000 can be passed on to children without incurring the 40% IHT tax.

The nil-rate band is set to increase by £25,000 each year, reaching £175,000 in the 2020/21 tax year. This would allow a married couple to inherit a family home worth up to £1 million.

7. Capital Gains Tax (CGT) Allowance

The CGT allowance will rise from £11,100 to £11,300.

CGT is applicable to any income that derives from the sale or disposal of most personal possessions worth £6,000 or more, property that isn’t a primary home, non-ISA based shares/investment or commercial assets, so a £200 increase in the allowance will be welcomed by many.

8. National Living Wage increase

The National Living Wage, which is an obligatory minimum wage for workers aged 25 and over, has risen by 4%.

This will see a worker earning £7.50 per hour instead of the current rate of £7.20. Applied to a 37.5 hour work week, this would see an increase of £45 per week. Those under the age of 25 aren’t as fortunate, however, as the National Minimum wage has risen by 1.4% which is below the current CPI inflation rate of 2.3%.

The new National Living Wage and National Minimum Wage rates are:

• £7.50 per hour for those over 25
• £7.05 per hour for those aged between 21 and 24
• £5.60 per hour for those aged between 18 and 20
• £4.05 per hour for those aged under 18
• £3.50 per hour for apprentices

9. Vehicle Excise Duty (VED)

A complete overhaul to the road tax system will see a standard annual rate rolled out in place of the current emissions-based bands.

Anybody buying a new car from April 1st 2017 will pay a special rate ranging from £0 – 2,000 for the first year depending on engine emissions, and then a fixed annual rate from then onwards:

• Zero emission: £0
• Standard: £140
• Premium (vehicles costing over £40,000): additional £310 for five years

The new VED charges will only affect new cars, so the rates for existing car owners will not change.

The overhaul has been met with both opposition and support. Some higher emission car owners will be hundreds of pounds better off, but there are a few losers. For example, the Mercedes-Benz C300 BlueTec Hybrid, which would incur £0 VED in 2015, will be £2,370 worse off over the next six years.

10. NHS Charges

The cost of an NHS prescription will rise, along with dentist charges.

These changes were made a little before the start of the new tax year, but they will have an impact for anybody who needs to access the NHS. A prescription has risen from £8.40 to £8.60, but pre-payment cards will not change.

Visiting the dentist will be slightly more expensive too, as:

• The cost of a check-up rises from £19.50 to £20.60
• The cost of a filling rises from £53.90 to £56.30
• The cost of complex work rises from £234.30 to £244.30

Lots of changes have been made for the 2017/18 tax year, some good and others not so much. Working out if you will be better or worse off will depend entirely on your circumstances, but with significant changes to the ISA allowance, the tax-free Personal Allowance and the National Living Wage, it definitely isn’t all doom and gloom for everybody. With the general election on the horizon, these changes may be entirely different after the 8th of June, so staying up to date will prevent any confusion.

The information within this article is based on our current understanding of HM Revenue & Customs guidelines at the date of publication. Any tax reliefs are dependent on your own particular circumstances and are subject to change. The Financial Conduct Authority does not regulate tax advice. The Financial Conduct Authority does not regulate Tax Advice