News

The new tax year starts on 6^th April and as always it brings a few changes that will affect your take-home pay. Let’s take a look at what this might mean for you.

The changes for 2015/16 are:

• The basic tax-free personal allowance will rise from £10,000 to £10,600. For many of us, this means a new tax code. For example, if it’s 1000L, it will become 1060L.
• You’ll pay basic rate tax (20%) on earnings up to £31,785 (down from £31,865 last year) over your personal allowance.
• You will pay higher rate tax (40%) on earnings between £31,786 and £150,000 over your personal allowance.
• You’ll pay employee’s National Insurance on weekly earnings over £155 (up from £153 last year).
• Employer’s National Insurance will apply to weekly earnings over £156 (up from £153 last year).
• Student loan repayments will be calculated on earnings over £17,335 (up from £16,910 last year).

How does this affect my pay?

Depending on your circumstances, your take-home pay will probably increase, but could also decrease, by a few pounds.

Going up?

The tax-free personal allowance and National Insurance changes are likely to increase your take-home pay. If you’re paying off a student loan, each repayment will be a bit lower.

On the other hand…

If you’re in the higher rate tax bracket, you’ll pay 40% tax on a slightly larger portion of your earnings. Nevertheless, it’s likely that your deductions will still be lower overall.

The bottom line

These factors will balance out differently for each person, with most of us seeing an increase to our take-home pay.

The new tax year happens around Easter, when many people take a break from work. It’s worth noting that if you’re on a cumulative tax code, your first payment after the holiday will be higher than usual.