Amid much criticism by Labour and action groups, the Treasury argues that the poorest 80 per cent of households will actually be better off. Around 21 million people earning up to £35,000 will gain and over half a million people will no longer pay tax at all, as the personal allowance was raised from £6,474 to £7,474.
There was also a one percent rise in employees’ National Insurance contributions, a freeze on the inheritance tax threshold, an extra 5% on stamp duty for homes worth more than £1m and restrictions on tax relief on pension contributions for those who save more than £50,000 per year.
The annual increase in the state pension and changes to benefits won’t start until Monday but Labour are already saying that the changes would hit the poorest the hardest and that it would be a "very, very tough day for families.”
Some of the most controversial changes have been to the thresholds in the tax credits system. Effectively, the more people earn, the faster their payments will reduce. Tax relief for employer-supported childcare will no longer be available to claimants who are high earners and universal child benefit has been frozen for three years.
As far as savings are concerned, the limit for saving in a tax-free Individual Savings Account (Isa) has risen to £10,680, of which half can be saved in cash. There is also a new reduced annual allowance for tax-free pension saving in place.
Pension contributions that qualify for tax relief will be reduced to an annual allowance of £50,000 instead of the previous limit of £255,000. And from now on there is a change to converting pension pots into income. These include the end of the effective compulsion to buy an annuity by the age of 75.
For more information, please visit www.glazers.co.uk
[ add comment ] ( 9 views ) | permalink | ( 3 / 662 )