Brits To See Changes In Earnings & Savings In New Financial Year

Another financial year has commenced in the UK and to many it is business as usual. However Brits will do well to pay attention to the new tax laws that have come into play during this financial year as it will impact how much Brits end up earning, saving and paying in taxes.

UK nationals can expect their salary and bank balances to feel the pinch from these changes.

Higher Tax Rates Being Imposed

The most significant change is the one to income tax rates. For one, there is a rise in the personal allowance from £11,500 to £11,850 while a basic income tax of 20% will be imposed on income up to £34,500 and a 40% tax on income between £34,501 and £150,000.

There will also be changes to the Scottish tax system. A 19% tax will be imposed those earning between £11,850 and £13,850. The next step of 20% is for those earning between £13,850 and £24,000. The third step of 21% is for £24,000 to £43,430. The highest tier is a 41% tax on earnings between £43,430 and £150,000 and anyone earning more than that will have to pay 46%.

Pension auto-enrollment has changed though. The minimum contribution now rises to 3% of the salary on the employee side and 2% on the employer side. People auto-enrolled in pensions will now have to pay 5% of their salary in total.

The marriage allowance has also been changed. This allows for a couple who have one earning more than the other one to transfer their unused personal tax allowance to their primary breadwinner so that less income tax is paid. The allowance has risen to £1,150 and can potentially save a couple around £238 in taxes.

Some Changes Will Be Welcomed

There has been a change in the junior ISA allowance to £4,260, which means people can save more without taxes. This is useful for child savers.

In a statement, Rachel Springall who works at Moneyfacts said

It’s worthwhile for parents or guardians to take advantage of a junior Isa because of their tax-free nature and the fact that they offer better interest rates than child savers.

Yet another change is for those earning money on investments in stocks. In the past, people could earn up to £5,000 on dividends tax-free. This has now been lowered to £2,000. This could result in Brits moving their money to a savings account instead of staying in stocks.

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