14 Tax Year Changes You Need To Know About That April Kick
As the month of April advances, the new tax year begins and it means a lot of changes that could affect our daily life.
The new fiscal year officially went into effect yesterday (April 6), bringing with it a flood of new changes for millions of people.
It follows last month’s budget in which the Chancellor announced changes to universal credit, pensions, first-time buyers and income tax thresholds.
As of Thursday, minimum wage workers have already seen their wages increase – the highest rate (the National Living Wage) now including people 23 and older.
This month, state pension benefits are also increasing and, good news for families, family allowances, housing allowances and a host of other allowances increase on April 12, reports the mirror.
Here are the main changes you should be aware of.
1. Pension credit
From April 12, pension credit payments will drop from £ 173.75 to £ 177.10 – with rates rising even more if you’re a caregiver.
The benefit exists to protect people from poverty in retirement – and could also allow those who qualify to get a free TV license.
Around one million people are currently deprived of pension credits.
2. Tax allowances and thresholds
The amount you can earn before you have to pay income tax – known as a personal allowance – increases to £ 12,570 on April 6.
The starting point for high income earners (40% taxpayers) will increase to £ 50,271.
The increase means a few extra pounds in your pocket – but in the long run, most people won’t be any better off.
This is because the thresholds are set to be frozen for five years starting in April.
This means that those who get a pay raise by 2026 may end up in a new tax bracket and, as a result, pay more taxes.
The official government forecaster said that would mean 1.3 million more people would pay income tax and a million more would pay the highest tax rate in the long run.
3. New government guaranteed mortgages
Chancellor Rishi Sunak has pledged to repay 95% of mortgages on April 19, with a number of banks having already confirmed they will offer generous loans.
The government has said it hopes to lure lenders into the low deposit market by offering to support buyers and compensate banks or building societies if a person is unable to meet their repayments. .
If its success remains to be seen, Lloyds, Barclays, Santander and HSBC have already joined the initiative which should, in theory, give a boost to movers and first-time buyers.
It is accompanied by an extended stamp duty holiday which will now run until the end of June.
All purchases up to £ 500,000 will continue to be tax exempt, with an additional extension on homes purchased up to a value of £ 250,000 until the end of September – for the benefit of second movers.
Rightmove estimates that the average stamp duty saving in England is £ 5,802.
4. State pensions increase
State pension payments will increase for millions of retirees on April 12 as new rates take effect in England and Wales.
The Department of Work and Pensions (DWP) said retirees would see their incomes increase by 2.5% per week.
People over 66 on the new state full pension will receive £ 179.60 per week, an increase of £ 4.40 from the current rate of £ 175.20.
The increase equates to an additional £ 17.60 per month and £ 228.80 for the 2021/22 fiscal year.
Those in receipt of the ‘old’ basic state pension (category A or B), which currently receive £ 134.25 per week, will receive £ 137.60 – a benefit increase of £ 3.35.
This equates to an additional £ 13.40 per month or £ 174.20 for the 2021/22 fiscal year.
The annual increase is tied to the “triple lockdown,” which was introduced in 2010 to protect retirees from any increases below the cost of living.
5. Statutory sickness benefit
Statutory Sickness Benefit (SSP) rates will change on April 6.
The amount you need to earn to qualify will remain at £ 120 per week, but payouts will increase to £ 96.35 per week.
6. Family leave and maternity allowance
The pay rate for maternity, paternity, adoption and shared parental pay is also increasing to £ 151.97 per week today.
7. Labor tax credits
Britons on Workplace Tax Credits will see their increase in Covid end today, but all is not lost.
Instead, families will receive a one-time payment of £ 500 to help them get through the ongoing crisis on April 23.
8. Family allowances increase
Child benefit increases to £ 21.15 per week for the first child and £ 14 per week for subsequent children from 12 April.
This is an increase of 10p and 5p per week respectively and means the new monthly payments will be £ 84.60 for an older or only child and £ 56.00 for any additional child.
Family allowances are paid every four weeks and also give applicants national insurance credits which can be counted towards their state pension.
However, if an applicant or their partner earns more than £ 50,000 per year, a fraction of it must be repaid at the end of the fiscal year.
This is a rate of 1% for every £ 100 earned above £ 50,000. If more than £ 60,000 is earned in a year, the full amount must be refunded.
9. Universal credit
Universal credit increases slightly on April 12 in addition to the extension of the £ 20 increase.
Singles and those under 25 will see their standard allowance drop from £ 256.05 to £ 257.33.
Singles aged 25 or over will see the standard allowance drop from £ 323.22 to £ 324.84.
For joint applicants under 25, the standard allowance will increase from £ 401.92 to £ 403.93.
Universal credit applicants can also get a boost if they care for a severely disabled person for at least 35 hours per week. The amount you receive per month will drop from £ 162.92 to £ 163.73.
Elsewhere, Covid’s £ 20 per week increase will continue until October 1, 2021.
10. Living allowance for disabled people
The highest amount you can claim in Disability Living Allowance is £ 89.60 (up from £ 89.15).
The middle amount drops to £ 60.00 (up from £ 59.70) and the lower amount climbs to £ 23.70 (down from £ 23.60).
11. Advance payments of universal credit
Universal Credit prepayments are also changing – and that’s good news.
Prepayments currently have to be repaid in installments over 12 months – but that repayment period is now increased to 24 months.
Deductions are currently capped at 30% of the standard abatement, but they also drop to 25%.
12. Employment and support allowance
Under 25 Employment and Support Allowance drops to £ 59.20 (from £ 58.90), while people aged 25 and over will see their payments increase to £ 74.70 (was £ 74.35) from April.
13. Housing allowance
Housing allowance increases to £ 59.20 (from £ 58.90) for those under 25 and £ 74.70 (from £ 74.35) for those 25 and over today.
14. Personal independence payments
The Daily Life component of the Personal Independence Payment (PIP) is increased to £ 89.60 (up from £ 89.15) for enhanced applicants and to £ 60 (down from £ 59.70) for standard applicants.
The mobility component of the Personal Independence Payment is increased to £ 62.55 (from £ 62.25) for enhanced payments and to £ 23.70 (from £ 23.60) for standard payments.