A new tax year starts today (6th April 2021) but what changes will affect your income?
The income tax thresholds will rise again (the amount you can earn before paying tax). The personal allowance will rise from £12,500 to £12,570 and the higher rate will rise from £50,000 to £50,270. This will be the last rise as these rates will now be frozen until 2026.
A rise of 2.5% (£4.40) will be added to the state pension which will mean a weekly rate of £179.60, pension credit will also see an increase. Other benefits such as child benefit will see an increase of 0.5%, this will mean £21.15 for the first child and then £14 for each subsequent child per week.
As announced earlier in the year, the National Living Wage will rise by 2.2% to £8.91 per hour and will be expanded to over 23’s instead of 25. Younger workers will also see the National Minimum Wage increase (depending on their age band).
Finally, the lifetime ISA charge for accessing money before the age of 60 reverts to 25% from 20%. If you need to access this money to buy your first home, then it is excluded.
It is always worth reviewing your finances at the beginning of a new tax year to ensure you are maximising all of your options.
Clear Vision Financial Management are a team of accountants based in Romsey and Poole, if you would like any advice on your accounting needs, please do get in touch. You can call us on 01794 330025 or email us.