The payment of tax is a necessary evil and a way of life, although no one likes paying it!
A pay rise is always welcome, but the downsides may be an increase in student loan repayments and, withdrawal of child benefit as earnings increase and additional tax and NI; sometimes there is really can be not a lot left in the pocket to spend. The transfer of marriage allowance is another area where the benefits may be lost.
The upsides though are, in the words of the Tesco ad – “every little helps”. Whilst some rates increase, others come down. The employed National Insurance contributions are at a rate of 3.25% when earnings exceed £50,370, compared to 15.05% below that level (although the mini budget in September has now reduced these rates to 2% and 13.85%). Whilst tax jumps from 20% to 40%, it is only 40% on the excess over £50,370. However, whilst pension contributions only obtained 20% tax relief before exceeding this threshold, there is potentially a further 20% tax relief now available. Additional tax relief is also now available on any payments made under Gift Aid e.g., membership of the National Trust.
Make the most of your allowances and reliefs. Call us today to arrange a review of your tax affairs, It could be highly beneficial!
