As the tax year comes to a close, it’s important to stay informed about the changes happening in April that could affect your finances. From new tax rates to changes in government policies, there are a few key things you need to know to stay on top of your money game. So, let’s dive in and get you up to speed on what’s happening in the world of finance.
First and foremost, let’s talk about the new tax rates that will come into effect in April. The good news is that the personal allowance, which is the amount of income you can earn before you start paying income tax, will increase from £11,850 to £12,500. This means that you will be able to keep more of your hard-earned money in your pocket. Additionally, the higher rate tax threshold will also increase from £46,350 to £50,000, giving a much-needed break to those earning above the basic rate.
But it’s not all sunshine and rainbows, as the National Insurance threshold will also increase from £8,424 to £8,632. This means that you will have to pay more in National Insurance contributions if you earn above this threshold. However, the good news is that the National Living Wage will also increase from £7.83 to £8.21 per hour, giving a boost to those on lower incomes.
Moving on to pensions, there are a few changes happening in April that could affect your retirement savings. The first change is the increase in the minimum contribution for workplace pensions. Currently, the minimum contribution is set at 5%, with at least 2% coming from your employer. From April, this will increase to 8%, with at least 3% coming from your employer. This means that you will have to contribute more towards your pension, but it also means that you will have a larger retirement fund in the long run.
Another change to be aware of is the increase in the State Pension. From April, the State Pension will increase by 2.6%, giving pensioners an extra £3.25 per week. This may not seem like a lot, but it can make a big difference for those living on a fixed income.
Now, let’s talk about savings and investments. The annual ISA allowance, which is the amount you can save tax-free in an ISA, will remain at £20,000. However, the Junior ISA allowance, which is the amount you can save tax-free for your children, will increase from £4,260 to £4,368. This is great news for parents who want to save for their children’s future.
In terms of investments, there are a few changes happening to the Capital Gains Tax (CGT) allowance. The CGT allowance, which is the amount of profit you can make from selling assets before you have to pay tax, will increase from £11,700 to £12,000. This means that you can make an extra £300 in profit tax-free. Additionally, the CGT rates for residential property will be changing from April. Currently, the rates are 18% for basic rate taxpayers and 28% for higher rate taxpayers. From April, these rates will be reduced to 10% and 20% respectively, giving a much-needed break to those looking to sell their property.
Now, let’s move on to some changes in government policies that could affect your finances. The first change is the introduction of the new Help to Save scheme. This scheme is designed to help those on low incomes save for a rainy day. Eligible individuals can save up to £50 per month and receive a 50% bonus after two years, with the option to continue for another two years. This means that you could potentially receive a bonus of up to £1,200 for saving just £2,400 over four years.
Another change to be aware of is the introduction of the new Student Loan Plan 2 threshold. Currently, graduates start repaying their student loans once they earn over £18,330 per year. From April, this threshold will increase to £18,935, giving graduates a bit of breathing room before they have to start repaying their loans.
Lastly, let’s talk about some changes happening in the world of banking. The first change is the introduction of the new £1 coin. From April, the old round £1 coin will no longer be accepted, so make sure to use up any old
