If you thought your energy bill rise was bad, wait until you see these …
The new tax year starts this week and for many, that means people being worse off. Spiralling energy prices and rising inflation are foremost in the minds of many householders. But changes in the tax system that come into play this week, and some bill increases that have received less attention in the press, are also set to cause a headache.
From Wednesday, the controversial rise in national insurance contributions (NICs) will come into effect. Announced last year, the government says the increase is to fund social care and the NHS.
Under the changes, both the employed and self-employed will pay 1.25p more in the pound. Employees will be charged 13.25% on earnings between £9,568 and £50,270 and 3.25% on income above that. For the self-employed, class 4 contributions will rise to 10.25% and 3.25%.
However, there is some respite to come in July, when the threshold at which NICs start to be paid will rise from £9,880 to £12,570. Accountancy firm Blick Rothenberg says those earning up to £41,389 will be better off than they were in the last tax year, but their pay will dip before then with the new regime.
Once your income exceeds that figure, you will still be worse off than in the 2021/22 tax year.
For an employed worker earning £50,000, the effect of the two changes will be a decrease in take-home pay of about £200 a year.
Tax on share dividends will also increase by 1.25 percentage points, which will particularly affect people who rely on dividends as part of their income.
Investors can earn up to £2,000 before they are liable for tax. After that, basic-rate taxpayers will pay 8.75%, while for those on a higher rate it will be 33.75%. A basic-rate taxpayer who receives £10,000 in share dividends will pay £700 in tax, up from
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