Essential Changes for Savers and Investors: New Tax Year 2017/18

By: Sarah Hollowell
Nearly 30 years ago, we set out with a simple enduring ambition to make the benefits of investing available to all. As we settle into the new tax year, we have distilled the three principal areas of change that concern tax allowances, exemptions and reliefs for savers and investors.

Personal Allowance

The personal allowance has risen by £500 to £11,500 this tax year, meaning that most taxpayers will be £100 a year better off. For those who are married or in a civil partnership and earn less than £11,500, there is an opportunity to use this allowance more tax efficiently by transferring up to £1,150 of your allowance to your spouse or civil partner, so long as they earn between £11,500 and £45,000 (i.e. if they are not a higher rate taxpayer).

Individual Savings Account (ISA)

ISAs can be one of the most effective ways to build savings and investments over time and with the allowance for all UK residents increasing to an all-time high of £20,000 this year – alongside the introduction of the Lifetime ISA (LISA) – there are two changes to take into consideration.


Lifetime ISAs encourage those who are between the ages of 18 and 39 to save and invest for their first property or retirement. In effect they are a hybrid of the Help to Buy ISA and a pension. You can save up to £4,000 in a LISA this tax year and the Government will add 25p for every £1 you save. Therefore if you were to make use of the full amount and save £4,000 by 5th April 2018, you would have £5,000 saved in total (before you take into consideration any interest or returns that may have been generated).

Below is a summary of a LISA in comparison to a SIPP and a regular stocks and shares ISA.


Lifetime ISA

Investment ISA

Personal pension

Minimum age


18 (adult ISA)

Opened from birth

Maximum age

39 to open, 49 to contribute


75 (for tax relief)

Basic rate tax relief on contributions @20%




Higher rate tax relief on contributions




Tax free growth within the wrapper




Government bonus on contributions @20%

Yes, capped at £1,000 per year (£32,000 total)



Tax-free withdrawals



First 25% only

Penalty-free withdrawals

Subject to conditions*


From 55 (57 from 2028)

Penalty rate

25% of total fund


25% or 55% (this charge is only payable on the value of the pension which is over and above the Lifetime Allowance of £1m)

* Unless the withdrawal is made by someone over the age of 60 or is to fund the purchase of a first home, a 25% penalty will apply (unless the investor is suffering from terminal illness or dies).

You can find out more about LISAs and how they compare to other saving and investment options here or you can download our latest Tax Effective Savings Guide here.


For deaths occurring on or after 3rd December 2014, it has been possible for ISA assets to be passed on to the surviving spouse or civil partner by way of an Additional Permitted Subscription (APS). However, during the estate administration period the ISA assets are currently exposed to income and capital gains taxes.
To keep informed on this matter please sign up to receive our monthly newsletter where we will update you once the proposed (favourable) changes to the rules come into force.


Following two decades of property inflation, here are three changes that property investors should consider when looking to make the most of their bricks and mortar investments.


The sharing economy continues to grow as more people look to supplement their income by letting out their property. This tax year sees the launch of a new £1,000 property income allowance for ‘micro-entrepreneurs’ using ‘sharing economy’ websites such as Airbnb. Where individuals are in receipt of income below the new allowances, the income will not be subject to tax and will not need to be reported to HMRC. This new allowance formed part of the 2017 Finance Bill. However, due to the impending general election, the Finance Act 2017 which was recently passed was condensed from 762 pages to 148, with many clauses being dropped. Although this allowance, along with the Trading Income Allowance, should have a start date of 6th April 2017, the law has yet to be passed.


Where an individual lets a room in their own home, they may receive tax-free income of up to £7,500 per year. The tax free amount increased from £4,250 in April 2016. If your home is held in joint names with a spouse or partner, you would each receive half of this allowance.


The family home is arguably one of the largest purchases that we make during our lifetime and can be passed down through the generations. The steep incline in property prices over the last 20 years has meant that the £325,000 inheritance tax (IHT) nil rate band fell short of the overall value of many estates. This has resulted in large inheritance tax bills for those inheriting. This year, the new ‘Residence Nil Rate Band’ of £100,000 has been introduced which potentially increases the amount in an estate not subject to IHT to £425,000. This exemption will increase by £25,000 a year until it reaches £175,000 in 2020. Broadly speaking, added to the nil rate band, each individual will have £500,000 of allowance so long as it includes a property they have lived in at some point during their lifetime that passes directly to children or grandchildren. As with the nil rate band, the RNRB is transferable between spouses and civil partners.
Should you like to know more on how to make the most of your options in the new tax year, please do speak to your Investment Manager or if you are new to Killik & Co please get in touch with your nearest branch.

Please note that the information above does not seek to cover all the changes and cannot be considered as a substitute for advice. As tax treatment depends on your individual circumstances and may be subject to change in the future, please consult your Investment Manager or our Tax & Trustee Services team on [email protected] for further information.