The new tax year ushers in plenty of changes that are sure to hit you where it hurts the most your pocket.
From April 1, expect the benefit for homeowners to end and for welfare claimants to feel the squeeze. This is why you should be on the lookout for any updates on UK Tax News. There is a bit of good news, however. State pensions and minimum wage are going up.
First, the good part of the UK Tax News…
Major Changes in Tax and Benefits – Less income tax
With the change in tax rules increasing the “personal allowance” from £11,500 to £11,850, low-earners will be spared from paying tax.
Unfortunately, the 40p rate will also increase from £45,000 to £46,350, which means the richest 13% will enjoy the same benefit as low earners even if they don’t need them.
Tax returns are sure to look different come next tax year, with more people likely to qualify for a tax refund.
Major Changes in Tax and Benefits – Minimum wage increase
In Birmingham, some of the lowest paid workers receive an increase in their minimum wage. From April 1, the National Living Wage or the minimum rate paid to workers aged 25 and above, will increase to £7.83 or 4.4%.
From the same date, all other national minimum wages will also increase.
“Employers need to be aware of these rate increases as a failure to apply them correctly could lead to enforcement action.” Employment law director at Peninsula, Alan Price, told the Liverpool Echo.
Along with the increase in minimum wage are possible changes to the tax rules that employers should be aware of when working out their tax returns and when applying for a tax refund.
Major Changes in Tax and Benefits – State pension increase
Compared to other areas, Birmingham is lucky to have generous Tory policies that are freeing pensioners from the freeze that are affecting others.
From the £122.30 old-style basic state pension, the rate will increase by £125.95 a week based on individual contributions.
For the new state pension, the £159.55 amount will increase to £164.35 a week.
Under the government’s “triple lock,” which ensures pensions rise each year, the changes in the state pension is an increase of 3%.
Major Changes in Tax and Benefits – More help for Housing Benefit claimants who moved to Universal Credit
Given the £1.5 billion help package for Universal Credit claimants, those who moved to Universal Credit from Housing Benefit will continue to get the old-style payment for two weeks following their transfer date.
Under Universal Credit, the standard wait for the first payment has also been cut from six weeks to five weeks. This effectively shortened the gap between the start of Universal Credit and the end of Housing Benefit.
Now, for the bad news…
Major Changes in Tax and Benefits- Council tax increase
Due to fears of financial stability, nearly all English local authorities plan to increase council tax. A majority of them plans to increase it by 95% and some by 93% in a bid to make ends meet.
In line with inflation, this year’s council tax can be hiked by up to 3%.
Major Changes in Tax and Benefits – Changes to Universal Credit
On 9 April, the following cuts were made on the Universal Credit:
- Cash freeze in working age benefits will go on its fourth year
- Working age benefits will be cut by 3%
- Benefit claims will be limited to two children
- Family element of support for Universal Credit claims and new tax credit is withdrawn.
Other not-so-good UK Tax News is extra tax around Vehicle Excise Duty (VED), the benefits for homeowners scrapped, and more benefits, such as sickness payment Employment and Support Allowance, scrapped.
Do you need help with your tax return or self-assessment ? Seek professional advice from tax experts, particularly those specialising in UK tax returns online, tax refund UK, and tax rebate services. If you are working in England as an international you may wish to consider find more information on PAYE Tax Refunds.