New tax year, new tax rates
With the new tax year we see changes in Income Tax thresholds. For those under 65, the Personal Allowance (the money you can earn before paying tax) has increased to £9,440 but for those aged 65 and over it has not increased over last year.
When income exceeds £100,000 your personal allowance will reduce by £1 for every £2 of earnings, therefore income of £118,880 will erode the entire personal allowance! The Additional Rate of tax has been reduced from 50% to 45% for the 2013/14 tax year.
As you can see there are winners and losers in all these changes. Please do contact us if you would like a free copy of our tax tables, which lists all the new year’s tax rates.
With the recent introduction of the ‘High Income Child Benefit Charge’, if one individual in the household earns more than £50,000 then you will have a reduction in the amount of child benefit you receive. When one individual earns more than £60,000 the entitlement will be lost altogether. You can find out how you are affected on the HMRC website.
If you are affected by any of these, Financial Planning is vital to assess your circumstances and see if there are ways of making your taxable income more efficient. Gift aid and pension contributions are just two ways that may help to keep you below the limits and thus securing your personal allowances or child benefit. At Chilvester, we have strategies in place to help our clients plan their finances with tax efficiency in mind.
If you would like to understand more about any of the above or how we can help you further, I would welcome a conversation with you.