For many the tax year end quietly came and went last Friday. For most, life seems to be carrying on. However the new tax year ushers in some key changes and I thought I would use this opportunity to remind ourselves of these.
The headline of course is that the tax-free personal allowance increases from £11,850 to £12,500. Although it’s never enough the increase of 5% is not unreasonable. The increase in the National Minimum Wage (NMW) for 25’s and over has increased by a similar amount as have the other bandings of NMW.
The conclusion is that many low income families (or as Chancellor Philip Hammond, writing in The Express likes to call them ‘strivers, grafters and carers’), will indeed keep a little more of their hard-earned cash.
It is interesting to note that on the other hand (in England, Wales and Northern Ireland) the basic rate threshold increases to £37,500 and the higher rate band therefore to £50,000, an increase that is well over 5%.
So the Chancellor’s claim that 32 million will see their tax bills cut seems to hold a certain amount of water, but it is likely to be the mainstream that see more of the benefits. The Treasury Minister, Mel Stride’s, echo of the Chancellor’s comments adds the word ‘workers’ to ‘strivers’ in the list of individual tax payers who might be benefiting. I wonder if the honourable Mr Stride is suggesting that grafters and carers are not workers? Some may disagree.
The other tax (by any other name) that we all pay, National Insurance contributions, are increasing to 12% on money earned between £46,350 and £50,000 and the capital gains tax annual exemption rising pathetically from £11,700 to just £12,000 (an allowance that has woefully failed to keep up with any measure of inflation that includes property price indices in the UK), leaves one with a distinct feeling that as usual they give with headlines and take away with stealth.
One thing is for sure and that is that the Office for Tax Simplification continue their sterling job of making things ever so complicated and I relish their forthcoming review of Inheritance Tax, suggesting that more complex simplification changes to the system may be on the horizon.
How we can help
As always our tax experts here at Haines Watts South West are on hand to advise you about your tax position as we enter the new tax year. To speak to one of our experts today please get in touch.
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