Millions will see their pay rise from today – here’s how tax cuts will affect you
A rise in how much people can earn before they start paying income tax kicks-in from today
MILLIONS of workers will get a much needed pay boost from today, as the new tax year starts.
First announced in the Autumn Budget, the amount of money you can earn before paying any tax at all - the personal allowance - has risen from £11,500 to £11,850.
The threshold at which better-off workers start paying the higher-rate of tax will also rise from today too.
That band will rise from £45,000 to £46,350, so millions of workers will have some extra cash in their pocket for the 2018/19 tax year.
How much will you save?
Using the MoneySavingExpert tax calculator, someone earning £30,000 a year in 2017/18 would have had a take-home pay of £23,681 or £1,973 a month - that's minus any other deductions like pension contributions and student loan payments.
But from today, Friday April 6, a worker's take-home pay will bump up to £23,783 - which means an extra £102 a year in their pocket.
According to calculations from accountancy firm Deloitte, single workers earning between £20,000 and £40,000 will be £101 better off, while the changes to higher-rate bands mean that those earning between £50,000 and £100,000 will be £236 up.
You can see how much the changes will affect you in the table above and for an accurate summary of how much income tax you will be paying head to the Government's income tax calculator.
Scottish tax changes
From today, workers in Scotland will have a new tax landscape to deal with.
A new starter rate of 19 per cent will apply to those earning between £11,850 and £13,850 while the normal rate of 20 per cent will continue to apply for salaries between £13,850 and £24,000.
New tax year changes: winners and losers
HERE are the winners and losers of the new tax changes.
Winners:
Workers - Almost everyone will be better off due to the rise in the personal allowance to £11,850
High-earners - The point at which workers start paying the higher rate of tax will rise from £45,000 to £46,350
Auto-enrolled workers - Minimum contributions are set to rise to 5 per cent, with 3 per cent coming from employees and 2 per cent from employer
Losers:
Middle earning Scots - Scottish taxpayers earning more than £33,000 will pay more income tax
Diesel drivers - Motorists buying new diesel cars could be hit with a tax hike of up to £500
Households - Council tax rises also come into force this month - with the average rise being £81
A new "intermediate rate" of 21 per cent will come into play for income between £24,000 and £43,430.
The changes should mean low earners will play slightly less income tax than they have before, but Deloitte has suggested that those earning £33,000 or more will pay around £70 a year extra than workers in other parts of the UK.
Car tax hike
The new Vehicle Excise Duty (VED) system was first introduced last April and a new rule for diesel drivers will come into force today too.
All new diesel cars will will face going up a VED band if they don't meet emission targets.
The charge for the first year, dubbed the showroom tax, will still be based on CO2 emissions.
But after the second year, diesel and petrol vehicles, diesel vans not included, will incur a £140 tax.
The new rules will not apply to vans or commercial vehicles.
Marriage tax rise
The marriage tax allowance lets you transfer 10 per cent of your personal allowance to your partner, to help reduce their tax bill.
But many Brits aren't taking advantage or haven't even heard of the benefit.
The tax saving has increased slightly from £230 to £238 for the new tax year.
Student Loans
From tomorrow students will be able to earn more before they have to start paying back their loans.
English and Welsh students will now be able to earn up to £25,000 instead of £21,000 before they have to make their repayments.
According to the Students Loan Company a graduate on £25,000 who has currently been paying back £29 (£348 a year) now won't have to pay anything at all.
Auto-enrollment pensions boost
Around nine million workers who are auto-enrolled into a pension scheme will see their contributions rise from one per cent to three per cent.
It's not all bad news though, employer contributions will also rise from one per cent to two per cent too, so you could be boosting your pension pot by around £330 a year.
The limit of the Pension Lifetime Allowance - how much you can have in your pot for retirement - will rise from £1million to £1,030,000.
Junior Isa increase
How much you can put away into a tax-free savings account stays the same for the new tax year - £20,000.
But mums and dads will be able to save more for their kids' future with the maximum amount you can put away rising to £4,260 from £4,128.
More on money
Investor tax
If you have shares, you'll face paying more tax on your investments for the new tax year.
Previously, you could have up to £5,000 in dividends without having to pay any tax.
But for 2018/19, this threshold will be reduced to just £2,000.
We pay for your stories! Do you have a story for The Sun Online Money team? Email us at [email protected] or call 0207 78 24516. Don't forget to join the Sun Money's Facebook group for the latest bargains and money-saving advice.
Comments