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Upcoming changes for individuals

Keep up-to-date with changes coming in the next few years.

National Living Wage

From April 2016 onwards, employees who are 25 years or above are entitled to the National Living Wage. The National Living Wage is compulsory and means anyone over the age of 25 years of age receives 50 pence more per hour on top of the National Minimum Wage. [Find out more]

Workplace Pension Schemes

To commence in April 2016, a new law was brought in for those aged between the age of 22 years old and state-pension age, which automatically enrols employees into a workplace pensions scheme that means that a percentage of an employee's wage is put into a pension, which the employer shall also be contributing into. [Find out more]

Tax-free Personal Allowance changes

From April 2016-17 the tax-free Personal Allowance, which is the amount individuals earn before they begin paying Income Tax, shall be increasing from £10,600 to £11,000. The government is planning on continuing the Personal Allowance increase up to 2020, so minimising Income Tax.

Welfare System Changes

The government are currently looking for ways to minimise the welfare budget, which include:

Accountants Exeter Working-age benefits shall be frozen for 4 years from 2016 onwards. This includes tax credits and Local Housing Allowance, but excludes Maternity Allowance, maternity pay, paternity pay and sick pay.
Accountants Exeter Household benefit cap shall be reduced to £20,000 (For London it shall be £23,000).
Accountants Exeter Child Tax Credit will be limited to 2 children for any children who are born from April 2017 onwards.
Accountants Exeter Individuals who are aged from 18 to 21 on Universal Credit will have to apply for apprenticeship of traineeship, gain work-based skills, or go on a work placement six months after their claim begins.
Accountants Exeter Social housing rent shall be reduced by 1% for four years for those on lower incomes
Accountants Exeter Individuals in social housing who earn over £40,000 in London, or £30,000 outside London, shall be required to pay rents around the market rate.


Dividend Tax Changes for Shares

The current dividend tax credit, which currently reduces tax paid on income from shares, shall be replaced by a new tax-free dividend allowance for the amount of £5,000 from April 16 onwards.

Inheritance Tax Updates

Currently in the UK Inheritance Tax is charged at 40% for estates over the tax-free allowance of £325,000 per person. Individuals who are married or within a civil partnership are entitled to pass on any unused allowance to one another.

The government plans to bring in, from April 2017, a change for a family home allowance, which would allow them to pass on their home to their children, or grandchildren tax-free after their death. The family home allowance would be added to the existing £325,000 Inheritance Tax threshold, and for a surviving spouse or civil partner they will have the total tax-free allowance of up to £1 million in 2020-2021. The allowance will be eventually be extended to estates of over £2 million.

Tax-Free Pension Amounts to be Reduced

From April 16 the amount an individual can pay into a pension without paying tax shall be reduced for those who earn over £150,000. Most individuals can put up to £40,000 a year into their pension without tax-free.

Higher Threshold for the 40% Tax

The 40% tax threshold shall be increasing from £42,385 in the financial year of 2015-16 to £43,000 in 2016-17.

Insurance Premium Tax increase

From November 2015 onwards the government is increasing the Insurance Premium Tax from 6% to 9.5%.


Free Childcare

To be introduced from September 2017 onwards, working families who have three and four year olds shall be entitled to 30 hours of free childcare, increasing from the current 15 hours.


Public Sector Pay Increase

Those in the Public Sector will see their pay increase from 1% a year for 4 years from 2016-17.


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