A new tax year (April 6th) can mean some changes to tax, benefits and lots of other financial stuff – which can mean more money in your back pocket (we can hope anyway!).
Here’s the top changes this year:
1. National Insurance contributions reduced from 10% to 8% for those employed, and reduced from 8% to 6% for the self-employed. This is what you’ll pay on your income in addition to Income Tax, and these rates apply up to £50,270 in income (after the £12,570 tax-free Personal Allowance), after that it reduces to 2%.
2. Capital Gains Tax allowance reduced to £3,000 from £6,000. This is how much you can make in profit each year (when selling things like investments and property) before you have to pay tax. You’ll either pay 10% or 20% tax depending on your income (20% over £50,270).
3. Dividend Tax allowance reduced to £500 from £1,000. This is how much you can make in dividends tax-free (companies paying their profit to you as an owner (a shareholder)).
4. Child Benefit maximum income limit has increased from £50,000 to £60,000 (technically called the High-Income Child Benefit Charge threshold). And, now reduces slowly as you earn up to £80,000, when it stops completely.
5. Minimum wage increases (the National Living Wage (over 21), and National Minimum Wage (under 21)):
6. The limit to register for VAT (if you’re running a business or sole trader) has risen to £90,000 per year, from £85,000.
7. You can now save into multiple types of the same ISA within the same tax year (except Lifetime ISAs). So, you could have lots of different Stocks and Shares ISAs, and save into them all in the same year (previously only one was allowed). If you’re saving and investing, check you’re using one of the best Stocks and Shares ISAs.
Some good, some bad, but unfortunately not much more cash in your pocket this time round. Maybe next year…
Nuts About Money tip: if you find yourself paying lots in tax, you can reduce your tax bill, while also building up your retirement savings, by saving into a private pension. Here’s where to learn more, and find the best private pensions.