As Spring appears to have finally arrived, now would seem a good time to give your finances a “spring clean”.
The Chancellor of the Exchequer delivered the Budget for 2013 on 20 March and announced a number of changes that will affect UK taxpayers.
The personal allowance for those under 65 has risen from £8,105 to £9,440, while for those aged 65-75 and over 75, the allowance remains the same at £10,500 and £10,660 respectively.
While the increase in personal allowance is good news, people earning over £41,450 (instead of £42,475 in 2012/13) need to be aware that they will become higher rate tax payers and any income earned above this amount will be taxed at 40%.
Individuals will have their personal allowance reduced by £1 for every £2 earned over £100,000; therefore an employee earning £118,880 will have no personal allowance and an effective income tax rate of 60% on the income between £100,000 and £118,880.
Those that earn over £150,000 will benefit from a reduction in the top income tax rate from 50% to 45%.
Have your circumstances changed?
Have you had a pay rise recently? Does the 2013 budget affect you?
It is possible to reduce your income below the £41,450 and £100,000 levels and therefore reduce your income tax liability by making contributions to your pension.
If you would like to know more about tax-efficient financial planning, please call us on 01932 830664 to speak with one of our qualified advisers or to book an appointment.