What The New Tax Year Means For You
You’d be forgiven for thinking that tax years are all about business accounting, P60s and tax returns, but in reality they often mark the start of some important changes for our day to day finances.
Here’s your quick guide to what’s changed this financial year:
Your ISA allowance is renewed*
For the year ahead, you have a brand new £20,000 allowance to use across the ISA family and any interest you earn will be tax-free! Many of us have held or know about Cash ISAs, but there are actually a whole range of different ISAs that could pay out much more interest than a typical Cash ISA –check out the Kuflink Innovative Finance ISA, for example.
Your tax-free personal allowance rises to £12,500*
Basic rate taxpayers are now allowed to earn £12,500 a year before having to pay any income tax, up from £11,850 last year.
The good news continues for higher rate taxpayers, for whom the threshold has increased from £46,351 to £50,000.
Your automatic workplace pension contributions increase
If you’re part of the workplace pension scheme, you can now expect to contribute 5% of your salary each month. This may vary in practice as technically the minimum contribution is now 8%, with a minimum 3% coming from your employer.
Although this increase may mean a little extra squeeze on your income, it’s always a great idea to make sure you save as much towards retirement as you can. You may even wish to consider additional investments to make sure your golden years really are golden!
2.1 million people expected to benefit from wage rises
From April onwards, the national living wage will be increased to £8.21 per hour with the national minimum wage for those aged 24 and under also rising.
*Capital is at risk. Your tax treatment will be dependent on your personal circumstances and subject to HMRC requirements.