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For many employed individuals who are
checking their payslip this month it
should include a welcome bonus of a £60
reduction in their income tax deduction.
The reason for this is the increase in the
personal allowance which finally took
effect for paydays from 7 September. Don’t
expect the bonus each month as the effect
for October onwards will be a reduction in
tax of £10 a month! However not everyone
will see the benefit as higher rate
taxpayers, although benefiting from the
increase in their personal allowance, will
be paying more tax at the higher rate of
40% due to a change in the higher rate
threshold.
As has been widely reported the
increase in personal allowance from £5,435
to £6,035 means that the majority of basic
rate taxpayers will be £120 better off for
the current tax year. The increase is
designed to compensate those taxpayers who
were worse off following the removal of
the 10% starting rate of tax from
non-savings income.
HMRC published some guidance for both
employers and employees on the changes and
this can be found using the link below.
Please get in touch if you require any
clarification of the new rules.
Internet links:
HMRC guidance
Employee guidance and
Employer guidance |
