Salisburys accountants would like to wish everyone a very happy New Year, especially to all our clients old and new. Welcome to 2014. We hope everyone had a very Merry Christmas and that you are looking forward to the year ahead.
It is another new year and a good time to look at what is changing in the world of personal finance over the coming months as a result of the announcements in the 2013 Autumn Statement.
Some changes that will come into effect this year are a rise in the personal finance allowance. This change will take place in April 2014 and the allowance will rise to £10,000. This means that this amount is now the section of income that the majority, excepting the very highest paid, can earn before tax begins.
It has been stated that starting in 2015 the personal finance allowance will then rise by the Consumer Prices Index and how this measures inflation over the coming years.
According to the previous year’s Autumn Statement (2012) many benefits would see a 1% rise over three years. This applies to working age benefits and some tax credits. Following this announcement some benefits will be rising by 1% this April 2014 including job seekers allowance, housing benefit and income support. Other areas affected by the increase will be income support and employment support for those with illness or disability, the lone parent element of working tax credit, the tax credit regarding children in low income families and the equivalent benefits of the new universal credit system will also rise by 1%.
You can look forward to a rise in the state pensions this April. This will increase by 2.7% and this is being brought in to more accurately reflect the cost of living. This would raise the state pension to £113.10 per week. There are some other additions to the effects on pensions that will be starting this April such as the annual allowance being cut to £40,000. This is the amount of tax advantaged pension you can save in a year. The lifetime allowance is being cut as well. This will go down to £1.25 million. This is most likely to affect higher earners with private pensions since it restricts the tax advantaged pensions savings you can put away throughout your career.
According to the Autumn Statement for 2013 there are other changes concerning married couples that may come into effect next year (2015) following a vote on the proposal in the Commons. If successful this new policy would mean that in 2015 one person in a marriage or civil partnership could pass £1000 of personal allowance to the other spouse. This could affect your personal finance because it means certain couples could receive a tax saving of up to £200, however there would be some restrictions. It would only apply to married couples and civil partners where neither is earning less than the personal allowance or neither is a higher rate taxpayer.
If you are in doubt about whether your personal finances will affected by these changes or how they will affected please seek advice.
