This time of year typically brings about changes in the financial landscape, and this year is no exception. The commencement of the new tax year on April 6th ushers in several modifications that may impact your finances, spanning from savings and investments to childcare and taxation. Here are the key developments you should be aware of.
To begin, for the first time, it is now permissible to contribute to more than one Cash ISA per year. This allows for the diversification of savings across various Cash ISAs while still maintaining tax-free status. Furthermore, there have been alterations in the range of investments offered within Innovative Finance ISAs, providing individuals with a wider array of options to foster tax-free savings.
For parents, there are two significant changes worth noting. The extension of free childcare hours from three-year-olds to two-year-olds now offers up to 15 hours per week during term time. Moreover, the threshold for eligibility to claim Child Benefit has been elevated to £80,000 for household income, extending access to more parents.
Individuals planning to sell a second property should be mindful of changes in Capital Gains tax. The allowance has been reduced to £3,000, although higher rate earners will benefit from a decreased tax rate of 24 percent, down from 28 percent. Furthermore, the tax-free allowance for dividends has been set at £500, meaning any dividends exceeding this amount will be subject to taxation.
Energy costs are projected to decrease due to the decline in the Energy Price Cap, but most other household bills, including streaming services, TV licensing, mobile phone and broadband contracts, and Council Tax, are set to increase.
On a positive note, recipients of the state pension will see an increase in their weekly payments. Additionally, the Lifetime Allowance for pensions has been abolished, allowing individuals the freedom to contribute as much as they desire. Furthermore, there will be an increase in the National Minimum Wage, resulting in higher take-home pay for workers.
Amidst these financial changes, it is crucial to find opportunities to save and maximise your income. Numerous avenues exist for savvy saving and earning extra income, offering some relief during this period of financial strain.