The new tax year for 2016-2017 starts today (April 6th) which means new changes, so here is what you need to know.
THE NEW STATE PENSION
The new ‘single-tier’ state pension starts today which means anyone who reaches pension age from April 6th will get the full flat rate payout of £155.65 per week. This will only apply if you have paid at least 35 years of National Insurance contributions. If you have paid National Insurance contributions for between 10 and 35 years, you will get less than this and will depend on how much National Insurance you have paid.
This includes anyone who has been contracted out at any point. (From the 6th April, individuals will no longer be able to contract out of the Additional State Pension)
Visit the Gov.uk website for further information by clicking here.
BASIC STATE PENSION
This will go up from a maximum of £115.95 per week to £119.30 per week from 6th April.
STANDARD LIFETIME ALLOWANCE
The Standard Lifetime Allowance has been cut from £1.25 million to £1 million.
Generally you would pay tax on pension pots over the Standard Lifetime Allowance. The rate you pay on your pension savings above the Standard Lifetime Allowance will be dependent on how your pension is paid to you. It would be 55 per cent if taken as a lump sum or 25 per cent if taken any other way.
TAPERED PENSION ANNUAL ALLOWANCE
The Pension Annual Allowance will be gradually reduced from £40,000 to £10,000 for those earning between £150,000 and £200,000 per year.
INSURANCE PREMIUM TAX RISE
Insurance Premium Tax is due to rise by 0.5 percentage points to 10 per cent from the 1st October 2016. This could see Home Insurance bills rise as well as other insurances.
This rise will be the second tax increase in a year, the first was introduced on the 1st November 2015 which seen tax rise from 6% to 9.5%.
See if you can save money on your Buildings & Contents cover by clicking here.
TAX FREE PERSONAL ALLOWANCE
The amount of money you are allowed to earn before income tax is payable is going up. This will rise to £11,000 from £10,600 and will rise the following year to £11,500 from 6th April 2017.
40P TAX THRESHOLD
The amount you can earn before having to pay higher rate tax (40 per cent) is rising to £43,000 in 2016-2017. This is an increase from last years £42,385 and will increase further in April 2017 to £43,600.