As well as new tax allowances, the new tax year appears to be bringing about many price rises to some of our most used and necessary services – something for everyone to watch out for.
For example, the energy price cap brought in by the Government on 1 January has risen by 10% for the average household and the big six providers have all increased their prices up to the new limit, according to The Times (the increased cap is applied to dual-fuel direct debit customers on the suppliers' most expensive tariffs).
The average water bill is also set to rise by £8 (a 2% increase) and the price of a first-class stamp increased from 25th February from 67p to 70p (an increase of over 4%).
From today (6th April 2019), the average Council Tax bill will rise by 4.7% - well over the current level of inflation. And the annual Television Licence will increase by 2.6% to £154.50.
The good news is that the new tax year also means that you have a raft of new tax allowances to make the most of.
The Personal Allowance – the amount you can earn before paying Income Tax - has increased to £12,500 from £11,850, a large and valuable increase of over 7.5%. And for higher rate taxpayers, the threshold at which you will pay higher rate tax will increase from £46,350 to £50,000 if you live in England or Wales - resulting in a tax saving of £130 for basic rate taxpayers, with higher rate taxpayers saving up to £860. While Scottish taxpayers will also benefit from the increased Personal Allowance of £12,500, the Scottish Parliament has frozen the higher tax rate threshold at £43,430 for 2019-20.
However, there will also be a rise to National Insurance Contributions – so, you could argue that what we are being given with one hand is at least partly taken away by another.
Pension auto-enrolment contributions are also set to increase. The employee contribution will increase to 5% from 3% and the employer contribution will rise to 3% from 2% - so overall, all those who have not opted out of their workplace pension will see a minimum 8% contribution into their pension fund this year.
The lifetime allowance on pension contributions will rise from £1.03m to £1.055m (£1,055,000) – this is the amount that can be amassed in a pension without incurring additional taxes. While it’s good news that it has increased, it was reduced a few years ago from a previous high of £1.8m, causing a real problem for many, who suddenly face a potential tax rate of up to 55% on excess pension funds being withdrawn.
And finally, don’t forget that there is a new ISA allowance of £20,000 to be used this year.
This isn’t an exhaustive list, but even with the examples we have pulled out, you can see there is an awful lot changing, both good and bad - so it is important to review your financial situation on a regular basis.
Whilst we can help you with which cash ISA or savings account to choose, as savings specialists, we don't provide advice on anything other than cash savings - but we can point you in the direction of someone who can help.
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In our view, it is important to take advice from someone who is not dependent on investing your money to earn their fee. Surely it makes sense to take advice from someone who is paid to provide you with specific financial planning, rather than for just investing your money.
If you’d like to speak to such a person, we can steer you in the right direction because over the years we have developed trusted relationships with other industry experts - including financial advisers.
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