Will the new Tax Year help you to become better off Financially?
With some of the announcements made by Jeremy Hunt in his speech last week in the Spring budget and when considering some other announcements that have recently been made, the new tax year may offer you some financial optimism.
The UK budget last week unveiled measures aimed at benefiting the man in the street. Some of the measures include an increase in wages through the rise in the National Living wage, reduced fuel duty, and a cut in National Insurance Contributions.
National Living Wage is confirmed to rise to £11.44 from April 2024. The UK Government has accepted the recommendations put to them and will be raising the national minimum and national living wages from 1 April 2024. This puts the National Living Wage at £11.44, which is two-thirds of median hourly pay for workers over the age of 21.
Fuel duty will continue to be frozen for the time being. The 5p cut in the tax that is paid on petrol and diesel that was due to end at the end of March 2024 will now be kept for another year. In a statement made by the treasury they advise that the average car user should save approximately £50.00 on average this year as the cut and freeze in the fuel duty is maintained until March 2025
The Chancellor announced that the main rate of Primary class 1 National Insurance contributions will be cut from 10% to 8% from 6th April 2024. The main rate of Class 4 National insurance contribution will also be cut from 8% to 6%.
The chancellor added that this cut may be worth about £450 a year to an employee who is on an average salary of £35,000 per annum.
The Chancellor did not take any measures to change the salary threshold at which people start to pay income tax or National Insurance Contributions, these remain frozen meaning that people will pay more tax as their income increases. Income tax thresholds have been frozen since 2021 and will remain so until at least 2028.
Child benefit is to be extended to more families. The point at which child benefit is withdrawn will now be at a higher level of earnings. Instead of starting to lose child benefit payments when at least one parent earns over £50,000 a year, this threshold will now increase to £60,000. It should be noted that this benefit will be taken away in its entirely from £80,000 a year, rather than £60,000.
Child benefit is worth £24 a week for one child and £15.90 for each additional child. These payments are due to rise to £25.60 and £16.95 a week in April 2024. Overall, the government estimates 485,000 families will gain an average of £1,260 in child benefit in 2024-25 because of this change, and 170,000 will avoid having to pay any back.
By April 2026, consideration is being given to move it to a system of household income and not that of individual.
The state pension, as previously announced, will go up by 8.5% in April, which means it will rise to:-
- £221.20 a week for the full, new flat-rate state pension (for those who reached state pension age after April 2016)
- £169.50 a week for the full, old basic state pension (for those who reached state pension age before April 2016)
The above is not an exhaustive list of all the changes that will take place in the 2024/2025 tax year, but it does highlight that among all the changes there is some good news.
Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Please note that some mortgages such as commercial BTLs are not regulated by the FCA.