The incoming tax year brings relatively few changes compared to previous years, but may still impact how much money you have in your pocket at the end of each month. Here's what you need to know about the new tax year:
Will I be better off?
The majority of workers should see a little more money in their pockets this year, with the personal tax allowance increasing from £11,850 to £12,500 and the threshold at which the higher tax rate becomes payable increasing from £46,350 to £50,000. From 2021 onwards, further increases to the Personal Allowance and tax thresholds will be indexed with inflation.
All minimum wage rates increased from Monday 1 April, with a worker on the National Living Wage seeing their hourly wage increase from £7.83 to £8.21 per hour.
However, increases in council tax and other services such as the TV license and household bills may well offset any gains – the average council tax bill is set to rise by 5% this year, along with other utilities also creeping upwards. In particular, those on a variable or standard tariff for their energy may see an increase as the price cap has been raised.
Those claiming benefits may see a real-terms decrease in their money this year as the benefit freeze continues for the fourth year in a row – this includes in-work benefits as well as support payments such as Jobseeker’s Allowance (JSA) and Employment and Support Allowance (ESA).
As wage growth generally continues to outstrip inflation, people may find that their pennies and pounds go a bit further this year.
What about savers?
The annual ISA allowance remains at £20,000 for this year, while the Junior ISA allowance will increase to £4,368 in line with inflation.
It remains uncertain if the Bank Base Rate will rise this year given the continuing uncertainty with Brexit – any rise would of course be welcome news for savers who have seen, until very recently, historically low interest rates and subsequently very little interest on their savings, and perhaps not-so welcome news for borrowers who may see their monthly payments rise.
What should I do now?
The end of the tax year is a common time for savings accounts to mature. Some people will choose to roll their savings into a new account, while others may withdraw their money and move it to a different type of account or to a new provider entirely.
On 6 April we’re launching a range of refreshed savings products, including the return of our popular Monthly Saver ISA account. Check back on 6 April to see our newest products and interest rates or call into one of our branches.