11 reasons to be happy this new tax year

We don’t tend to celebrate the start of the new tax year with champagne and fireworks. But perhaps this year we should.

tbc

Prime Minister David Cameron says 94% of working households are better off under tax and benefit changes brought in on Monday.

But politics aside, we’ve found 11 reasons to be grateful the 2015-2016 tax year is upon us. These are the changes that should make you happy NOW!

1. No more 10p tax on saving s

Whoop whoop! – the 10% starting rate of tax on savings has now been slashed to 0%. The amount of savings income you can earn has also been increased from £2,880 to £5,000.
Find out more with our article.

2. Higher income tax allowance

Your personal income tax allowance – or the amount you can earn before being taxed – has gone up from £10,000 to £10,600. 

And it looks likely to keep rising over the next five years. Both the Conservatives and the Lib Dems have pledged to continue to increase it – to £12,500 by 2020 – if they win the General Election.

3. Bigger tax-free ISA allowance

As of Monday, 6 April, the amount you can shelter from tax in an ISA has also gone up from £15,000 to £15,240. Watch our What is an ISA? video to find out more.

4. Pension freedom has started

New pension rules mean that savers with a defined contribution pension "pot" can now take out as much as they like when they reach the age of 55. You can also pass on your pension tax-free if you die before the age of 75.

Just don’t rush into making any hasty decisions that could have a huge impact on your retirement. And be very wary of scams from people trying to part you with your cash, as we explain more about here.

5. Higher State pension payments

Already retired? The good news for you is that the State pension also increased on Monday, with payments rising by 2.5%.

6. Lower beer prices

Drinkers rejoice! You should pay less for a pint than you did last tax year, thanks to a move to take 1p off the cost of a pint of beer. Cider and whiskey duty has also been cut by 2%, while wine duty has been frozen.

7. New Marriage Allowance

Are you married or in a civil partnership? Now that we are in the new tax year, you can register for the Marriage Allowance.

Prime Minister David Cameron says 94% of working households are better off under tax and benefit changes brought in on Monday

It’s a new tax break that allows you to transfer some of your tax-free personal allowance to your partner.  And it could save you up to £212 a year! Find out more here. 

8. JISAs are better and more flexible

Junior ISA and Child Trust Fund annual allowances went up to £4,080 for this tax year. If your child has one of the now-defunct Child Trust Funds you can also now transfer the money into a more competitive Junior ISA, as we explain here.

AND there’s more to come…

Some of the changes announced in the Budget will come in later this year – depending on the results of next month’s General Election of course!

9. No more NICs for the self-employed

Most self-employed workers currently pay Class 2 National Insurance Contributions (NICs) of £2.75 a week.

But from the next parliament, Chancellor George Osborne has promised to put an end to NICs for both the self-employed and employed workers under the age of 21.

The average self-employed worker should therefore be about £143 a year better off.

10.  ISAs are becoming more flexible

At the moment, any money you withdraw from your ISA counts towards your tax-free allowance. So, say you pay in £13,240 and then withdraw £10,000 you can only pay in another £2,000 before hitting your 2015-2016 limit.

Under the new rules planned for this autumn, however, Osborne has promised "complete freedom" to move money in and out without losing your tax-free entitlement.

11. The Help-to-Buy ISA will land

Looking to get a foot on the housing ladder? All the major parties have pledged their support for Help to Buy ISAs with which the government will pay in £50 for every £200 you save towards a deposit.

The maximum you can claim is £3,000 per person, meaning a couple buying together could claim up to £6,000 towards their first property if they each saved £12,000. Find out more here.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

Did you enjoy that? Why not share this article

SAVE MONEY NOW

Other articles you might like

Popular guides