New tax year will affect salaries

MILLIONS OF PEOPLE will have their salaries affected from today as the government’s tax changes take effect at the start of the new tax year.

Around 21 million earning below £35,000 will gain from the increase in the personal allowance from £6,475 to £7,475, a measure that will also mean that 800,000 will pay no tax.

However, the salary at which workers pay the 40% higher rate of tax will decrease from £43,875 to £42,475. This will catch around 750,000 people. Additionally, National Insurance will also increase.

Mike Warburton, tax partner at Grant Thornton told This is Money website: ‘Those on the lowest incomes will benefit most from the tax changes with those on middle incomes being squeezed. The hard fact is that we are all having to tighten our belts this year as we cope with the increase in VAT together with rising fuel and most other costs.’

A couple with one earner on £43,000 and two young children, aged four and six, will be £590 a year worse off, according to Grant Thornton.

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