Most to pay less from April 2019
Most people will pay less income tax from next April after the personal allowance and higher rate tax thresholds were both increased in the Budget – but higher earners will see part of the gain cancelled out by stealth rises to national insurance.
Philip Hammond announced in his Budget speech that income tax changes planned for 2020 will come in a year earlier than planned. But there was no mention of the changes to national insurance thresholds, which were buried in the Budget papers and only emerged the following day.
Overall the changes should mean an extra £155 a year in your pocket if you earn between £12,500 and £50,000, and an extra £566 if you earn between £50,000 and £100,000
How is the personal allowance changing?
It’s set to rise from £11,850 to £12,500 – meaning that anyone who earns between £12,500 and £100,000 a year will be spared paying tax on £650 of earnings.
How is the higher rate tax threshold changing?
From April 2019, the higher rate threshold will be raised from £46,350 to £50,000.
This will mean somebody earning between £50,000 and £100,000 will pay £860 less in income tax each year.
How is national insurance changing?
The Current NI thresholds are as follows:
- Between £0 and £8,424: You pay no national insurance on this portion of your income.
- Between £8,424 and £46,834: You pay 12% national insurance on this portion of your income.
- Over £46,834: You pay 2% national insurance on this portion of your income.
From April 2019, all these thresholds will be raised to:
- Between £0 and £8,632: You pay no national insurance on this portion of your income.
- Between £8,632 and £50,024: You pay 12% national insurance on this portion of your income.
- Over £50,024: You pay 2% national insurance on this portion of your income.
This means that taxpayers will pay an extra 10% of their earnings between £46,834 and £50,024 on national insurance from April 2019. So while you are gaining on income tax, you are loosing on NI if you are a higher rate tax payer
source : Naomi Schraer