Newspaper article The Journal (Newcastle, England)

Q&A; Your Money Queries Are Answered by Trevor Clark, Director of Newcastle-Based Chartered Financial Planners Rutherford Wilkinson Ltd

Newspaper article The Journal (Newcastle, England)

Q&A; Your Money Queries Are Answered by Trevor Clark, Director of Newcastle-Based Chartered Financial Planners Rutherford Wilkinson Ltd

Article excerpt

QI was talking to some colleagues at work earlier this week and they commented that our take-home pay is set to increase in April (which surprised me, as my employer's pay review has just been announced and takes effect from January 1). Can you offer some assistance, please? A Certainly. Last week the Chancellor, George Osborne, delivered his Autumn Statement (which used to be referred to the Pre-Budget Report and was often nicknamed the "mini-budget").

As part of the report, Mr Osborne announced that, with effect from April 2013, the Personal Allowance (the amount which a person can earn before they pay income tax) will be increased by a further PS235 (above the already scheduled increase of PS1,100). This means that the personal allowance is set to increase by PS1,335 in April, which, all other things being equal, will have the effect of boosting an individual's take home pay. It also means that the Coalition government is on target to achieve its ambition to raise the personal allowance to PS10,000 by 2015.

The Chancellor also announced that the higher rate income tax threshold (beyond which income is taxed at 40%) will be increased by 1% in 2014 (from PS41,450 to PS41,865) and by a further 1% in 2015 (to PS42,285). However, these below-inflation increases are likely to mean that a greater proportion of the working population are higher rate taxpayers in 2015.

Other amendments to note are an increase of the ISA limit to PS11,520 and an increase to the IHT nil-rate band (the size of a person's estate which can be passed on upon their death, without inheritance tax being payable) to PS329,000.

QI read with interest recently your answer to a reader's question, which suggested that the Chancellor would use his Autumn Statement to reduce the Annual Allowance. Did he do so? A Yes, the Chancellor, George Osborne, used his Autumn Statement to reduce the Annual Allowance (the maximum tax-efficient pension contribution a person can make in any given tax year) from PS50,000 to PS40,000. He also reduced the Lifetime Allowance (the maximum pension fund a person can accrue over their working life, without paying a punitive tax charge at retirement) from PS1. …

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