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The beginning of April saw the arrival of a new tax year and with it some changes that affect your finances. Here are some of the biggest changes which may affect your bottom line:
The good news for those earning the National Living Wage is that it has risen by around 4% to £7.50 an hour if you are over 25 years old. If you are aged between 21 and 24 the new minimum is £7.05 an hour and if you are 18-20 you’ll earn a minimum of £5.60 an hour. For 16-17 year olds it’s now £4.05 an hour and if you are aged 19 or under and in the first year of an apprenticeship, you’ll earn at least £3.50 an hour.
The Income Tax rate has also risen. You’ll now start paying tax after your first £11,500, which should translate as at least an extra £100 in your take home pay over the year. Last year you would have to pay 40% tax on earnings over £43,000, but now it’s over £45,000 – meaning you’ll potentially have an extra £400 a year. This does not apply if you are in Scotland – you’ll still get taxed 40% on earnings over £43,000.
There is a freeze on in-work benefits payments, meaning that there will not be any increase in the amount you can claim. As inflation is currently at 2.3% this means that you may feel the pinch a little more as goods are more expensive than they were last year. This freeze is due to last at least another 2 years.
Child Tax Credit
There has been quite a big change when it comes to child tax credit. As of the 6th of April this year, you are no longer be able to claim the family element of Child Tax Credit for your first child, which would be around £545 a year. Also, for anyone who has had or is expecting their third child after the 6th of April, you cannot claim any more Child Tax Credit for this child – it’s only going to be paid for the first 2 children in a family.
If you are already claiming the changes won’t affect you, but if you stop your Child Tax Credits for more than 6 months, then re-apply you will be under the new rules and will only be able to make a claim for 2 children. Don’t worry if you are having a multiple birth, such as twins or triplets – you will still be able to claim for all the children.
Again, there has been a large change in who can claim housing benefit. If you are aged between 18 and 21 and are receiving Jobseeker’s Allowance, you will not be able to claim any housing benefit. This new rule does not apply to everyone – for instance if you have any dependent children or have some disabilities or are an apprentice you may still be able to make a claim.