The 2015/16 tax year begins on 6th April and that means a raft of changes to both taxes and benefits.
Here’s a round-up of the major changes that will affect our finances.
Income Tax
The tax-free personal allowance will increase from £10,000 to £10,600. This will also be the first year people born between 6th April 1938 and 5th April 1948 will have the same allowance as working age people, as their allowance has only risen by £100.
The higher rate (40%) tax threshold is increasing to £42,385.
And the starting rate of Income Tax on savings will be cut from 10% to 0% on savings income of up to £5,000.
The new couple's allowance means people who are married or in a civil partnership can transfer up to £1,060 of their tax-free allowance to their partner, but only if both partners don’t pay more than the basic rate of Income Tax.
And the married couple’s allowance, which is only available if one partner was born before 6th April 1935, is increased to a maximum of £8,355 and a minimum of £3,220.
National Insurance
The Class 2 rate of contributions is increasing from £2.75 a week to £2.80. The Class 3 rate is increasing from £13.90 a week to £14.10.
Tax Credits and Child Benefit
Elements of the Working Tax Credit are increasing, but only by small amounts, in line with Government policy.
|
Element |
Annual amount (14/15) |
Annual amount (15/16) |
|---|---|---|
|
Basic element |
£1,940 |
£1,960 |
|
Couple and lone parent element |
£1,990 |
£2,010 |
|
30 hour element |
£800 |
£810 |
|
Disabled worker element |
£2,935 |
£2,970 |
|
Severe disability element |
£1,255 |
£1,275 |
Meanwhile, the childcare element is frozen at £175 per week for one child and £300 per week for two or more children.
In terms of Child Tax Credits, the family element is frozen at £545 a year.
But there are small changes to other elements.
|
Element |
Annual amount (14/15) |
Annual amount (15/16) |
|---|---|---|
|
Child element |
£2,750 |
£2,780 |
|
Disabled child element |
£3,100 |
£3,140 |
|
Severely disabled child element |
£1,255 |
£1,275 |
Child Benefit is increasing by just 20p a week to £20.70 for the first child and by 15p a week to £13.70 for second and subsequent children. Meanwhile, guardian’s allowance is increasing by 20p a week to £16.55.
Keep on top of your wealth any time, anywhere with Plans
ISA allowances
[SPOTLIGHT]The tax-free annual ISA allowance will increase from £15,000 to £15,240. In addition, the Junior ISA annual allowance is increasing from £4,000 to £4,080.
The Child Trust Fund allowance is also increasing to £4,080, although you will be able to switch Child Trust Funds into Junior ISAs from 6th April.
State Pension
The Basic State Pension is increasing by 2.5%, or £2.85 a week, to a maximum of £115.95 a week. The maximum amount pensioners on low incomes can receive with the addition of the standard minimum guarantee of Pension Credit is £151.20 for a single person or £230.85 for a couple.
Tax on pension lump sums
If you decided to withdraw your pension in one go under new pension freedoms coming into force, from 6th April it will be taxed at your marginal rate of Income Tax (eg 20%, 40% or 45%) rather than at 55% as was the case before.
Tax on inherited pensions
Tax on inherited pensions is being scrapped if the pension holder dies before they reach 75.
Maternity and paternity pay
The statutory rate of maternity and paternity pay is increasing from £138.18 to £139.58 a week.
Air Passenger Duty
Children under the age of 12 won’t have to pay Air Passenger Duty on economy class tickets from 1st May.
Keep on top of your wealth any time, anywhere with Plans