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Thirteen changes to tax and benefits that could impact clients

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  • 06/04/2021
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Thirteen changes to tax and benefits that could impact clients
We are into a new tax year, and that means a host of changes to the tax and benefit system are now kicking in.

 

Here are some of the big ones, and how they could impact your clients’ personal finances.

Increased personal allowance

The personal allowance covers how much you can earn each year before paying income tax.

And it has increased from £12,500 to £12,570. The government announced at the Budget that it will be frozen at this level for the next five years.

Higher tax threshold

The point at which people start paying the higher rate of income tax has also jumped.

Now, people will only start paying 40 per cent tax on their income once they start earning above £50,271.

Statutory sick pay

The minimum payments that when employees are off sick are also increasing. 

Qualifying workers will now get £96.35 per week through statutory sick pay.

Employment and Support Allowance

For those receiving ESA, payments are about to rise. There are all sorts of different rates in place depending on age and family situation, but as an example, a single person over the age of 25 will now receive £74.70, up from £74.35.

Pension credit

Pension credit is a top-up for low-earning pensioners. For single recipients it is increasing from £173.75 to £177.10, while for couples it is increasing to £270.30 from £265.20.

Parental pay

For those off on maternity or paternity leave, the minimum income payments they can expect are rising to a weekly rate of £151.97.

Student loans

Ex-students need to earn a certain amount before they start repaying any student loans in their name. And that earning threshold is increasing from 6 April.

For Plan 1 loans, the threshold is rising from £19,390 to £19,895, while for Plan 2 loans it is moving from £26,575 to £27,295.

Attendance allowance

Attendance allowance is a benefit paid to those with a disability that means they need a carer to come and help them.

It is rising today from £89.15 to £89.60 at the higher rate, and from £59.70 to £60 at the lower rate.

Carer’s allowance

The new tax year means a small increase in the carer’s allowance, to £67.60 from £67.25.

Bereavement benefit

The widowed parents allowance applies to deaths between 11 April 1998 and 5 April 2017. Recipients will see their payments rise from £121.95 to £122.55.

Disability living allowance

The disability living allowance is paid across two components ‒ the care component and the mobility component. 

The care component itself is divided into three levels, and all of these are being increased, with the highest rate now paying £89.60.

The mobility component is divided into two levels, and both of those are increasing too, with the higher level increasing to £62.55.

Personal independence payment

PIP rates are rising for the 2021/22 tax year. The enhanced living component is increasing to £89.60 from £89.15, while the mobility component is rising from £62.25 to £62.55.

Working tax credits

Working tax credits were hiked by £20 last year as a result of the pandemic, but that has now been removed. 

Instead it is being replaced by a one-off £500 payment.

 

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