Happy New Tax Year 2021
06th April 2021
Every time the tax year ticks over on the 6th of April, we take a quick look at the major changes coming in. The last year’s seen a lot of upheaval, so it’s important to keep your finger on the pulse. Here are the main headlines you need to know about:
Tax and benefits
It’s always worth keeping an eye on your tax-free Personal Allowance threshold. Almost everyone gets a Personal Allowance. It’s listed in your tax code and tells you how much you can earn before you start paying tax.
For this new tax year, the basic Personal Allowance is £12,570. Anything you earn above that will be taxed at the basic rate of 20%, until you hit the threshold for the 40% higher rate at £50,271.
These thresholds are set to be frozen right up until 2026 – which could be a big deal for some people. If your annual pay goes up but your Personal Allowance doesn’t, over time you could well find yourself starting to pay the higher rate of tax. At the same time, people on lower incomes could find themselves paying tax when they weren’t before as their earnings rise.
People on Universal Credit will be seeing a small boost to their payments after the 12th of April. Singletons under the age of 25 will get a rise to £257.33, while those over 25 will get £324.84. If you’re claiming as a couple, the allowance will be £403.93.
All of these increases are on top of the current £20 uplift (which is extended until October). There’s also an allowance boost for people caring for someone who’s severely disabled, to £163.73.
If you’re still on the old Working Tax Credits (WTC) system, then the COVID-19 uplift has now run out, but you could qualify for a one-off payment of £500 to help soften the blow. HMRC will be in touch automatically if you qualify for that, but it comes down to whether you’re getting Working Tax Credits, Child Tax Credits or both. People who technically qualify for WTC but don’t get them because they earn too much should still qualify for the one-off payment.
Other changes include:
- Employment and Support Allowance (ESA) is rising to £59.20 for the under-25s and £74.70 for those older.
- The “daily living” part of Personal Independence Payments (PIP) is increasing to £60 for standard claims and £89.60 for enhanced ones. The “mobility” part is rising to £23.70 or £62.55, respectively.
- The top rate of Disability Living Allowance is also increasing to £89.60, with the middle and lower amounts being £60.00 and £23.70.
- Statutory Sick Pay is going up to £96.35 per week, with the qualifying threshold staying at £120 a week in earnings.
The biggest news for home-buying hopefuls is probably the return of 95% mortgages in April. Several lenders have already signed up to the scheme, which aims to put that first rung of the property ladder little more in reach. The government’s backing the loans to encourage more lenders to offer mortgages with low deposits.
At the same time, the stamp duty holiday’s still running until the end of June. Properties worth up to half a million pounds won’t be taxed, with homes worth up to £250,000 keeping the holiday until September ends.
Help for young families...
The weekly rates for maternity, paternity, shared parental and adoption pay have all gone up to £151.97. Meanwhile, from the 12th of April, Child Benefit is increasing to:
- £21.15 per week for your first child.
- £14 per week for additional children.
As before, if you or your partner earns over £50,000 a year, you’ll have to pay some of what you’re getting back through the High Income Child Benefit Charge.
...and for pensioners
If you’ve got older relatives claiming their State Pensions already, their incomes will be on the rise by 2.5% after the 12th of April. That brings the full State Pension rate to £179.60.
For people still on the old-style State Pension, the rise will be £3.35 a week for both categories A and B, to £137.60.
The RIFT Round-Up
The big New Tax Year news at RIFT is that more than 6,000 RIFT customers have already started this year's refund with us (that's over £6million in cash for our customers claimed from HMRC ON THE FIRST DAY) – and now’s the perfect time to join them!
Getting your tax refund sorted out now will set you free to get on with all the things you’ve been looking forward to once the UK lockdown ends. The past year’s been kind of a rollercoaster ride, so you could well find you’re eligible for extra tax reliefs or benefits – all of which will be taken care of by RIFT when we tackle your tax refund claim.
For self-employed and CIS people, the earlier you get your Self Assessment paperwork sorted the more notice you’ll have before the taxman comes knocking for his bite of your earnings. Talk to RIFT about getting your tax return filed.
A very happy New Tax Year from the UK’s leading tax experts! Whatever 2021 has in store for you, you’re always better off with RIFT.