Tax changes could boost pay and savings
Two new changes to taxation could see earners and pensioners keep more of their pay and savings, say experts from Waltons Clark Whitehill, chartered accountants and business advisers.
An increase in the Personal Allowance and a change to the Starting Rate Band for tax on savings both come into force in April 2015, but couples whose savings are unevenly divided could find themselves paying more than they need, warn the Hartlepool-based company.
The Personal Allowance – the amount of income which can be received without taxation – will rise from £10,000 to £10,500, for everyone except those with earnings above £100,000.
Additionally, the Starting Rate Band, which may apply a reduced rate of tax to income from savings and investments, where a person’s other income (salary, pensions etc) is less than or only marginally exceeds the Personal Allowance is is changing. Currently, in some circumstances, the first £2,880 is taxed at 10%, rather than the normal 20%. The Band is however set to increase to £5,000 from April 2015 and even more significantly the rate of tax is to be reduced to a headline grabbing 0%.
In particular, for married couples with low or modest pensions, who arrange for their savings and other income to be divided appropriately, this could mean total income of up to £30,000 per annum could be received completely tax free.
George Hardey, Senior Tax Manager at Waltons Clark Whitehill, said: “Many people aren’t aware of the Starting Rate Band, so are potentially already missing out by not having their savings arranged in the most efficient manner. The amount they could be missing out on will increase next year, so there is real value in talking to an expert and ensuring everything is in place to take advantage of arguably the best taxation environment which has been open to pensioners in many years.”
This was posted in Bdaily's Members' News section by George Hardey .
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