Why the tax pain just keeps on coming for so many people - Sarah Coles...
threshold, from £9,880 to £12,570. It means that less of your salary will be subject to NI, which will typically boost pay by about £330. It will also lift an extra 2.2 million people out of paying NI entirely.Unfortunately, it’s not as good as it sounds, because rather than being a tax cut it’s actually a partial reversal of a tax hike that came in a couple of months ago. In April, the rate of NI was raised by 1.25 percentage points, so you pay 13.
However, we’re not talking about vast sums of cash. £330 spread over 12 months is £27.50 a month. It’s a drop in the ocean compared to rising costs. So while it will help ease the pain slightly, those on lower incomes still have a huge headache in making ends meet. At the same time, while we’ve been distracted by NI hikes and cuts, the freeze on income tax thresholds has been inflicting more damage. The Institute for Fiscal Studies estimates that by 2025/26, when you take inflation into account, the freeze will effectively be a 16.4% cut in the thresholds.
While nobody would begrudge paying the taxes to make essential services function, you should also take steps to ensure you’re not paying more than your fair share. There are five things worth considering.If one spouse is a non-tax payer, and the other is a basic rate taxpayer, the marriage allowance lets the non-taxpayer give a tenth of their personal allowance to their spouse . This will save you £252, and can be backdated for up to four years.
You can claim the tax on £6 a week, which for a basic rate taxpayer is £1.20. For the full two years that comes to £124.80. In the current tax year – from April 6, 2022 – the rules have been tightened, so it’s much harder to qualify, but there’s still plenty of time to claim for previous years.Bargain-hunting train travellers have been thwarted by fare hikes.
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