News added on 06.12.2013

from HMRC LATEST NEWS

Income tax

2014/15 income tax rates and allowances published

As part of the Autumn Statement, the government has just published the tax and NI rates and allowances for 2014/15. What are the main changes that you need to be aware of so that you can plan ahead?

Personal allowance up. The standard personal allowance will be increasing by £560 to £10,000 for 2014/15. This means that basic rate taxpayers will pay £112 (£560 x 20%) less tax next year. Higher rate taxpayers won’t see the full 40% benefit of the increase as the starting point for the 40% band is being reduced by £145 from £32,011 to £31,866. This means that higher rate taxpayers will have a tax saving of £195 in 2014/15 compared with 2013/14. For example, someone earning £50,000 will pay tax of £9,822 in 2013/14 and £9,627 in 2014/15.

Transferable personal allowance. From April 2015 a spouse or civil partner will be entitled to transfer up to £1,000 of their personal allowance to their partner. However, it will only be available where one partner is a basic rate taxpayer and one has an unused personal allowance. It will not be available if either or both is a higher rate taxpayer as the maximum benefit available for a qualifying couple will be £200 (£1,000 x 20%).

Abolition of employers' NI for under 21s. From 6 April 2015 employers will no longer be required to pay employers' NI (usually 13.8%) on earnings paid up to the upper earnings limit (UEL) to any employee under the age of 21. We don’t have the UEL figure for 2015/16, but as a guide the UEL for 2014/15 will be £41,865 a year.

The personal allowance is increasing to £10,000 in 2014/15, which means a tax saving for 20% and 40% taxpayers of £112 and £195 respectively. Also, employers' NI is to be abolished for under 21s from 6 April 2015.

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