Today marks the start of the new 2012/13 tax year. For us accountants, this means we have exactly 300 days until the 31 January 2013 filing deadline for our clients 2011/12 tax returns. The team are chomping at the bit and we have our first tax return ready to be filed already! (Way to go Gemma!)
For the taxpaying British public the new tax year brings a mix of the good, the bad and the ugly.
The personal tax free allowances increases from £7,475 a year up to £8,105. This will mean an additional £126 a year in your pay packet, or enough to buy one extra Starbucks a week. For savers, the ISA limits have been increased from £10,680 to £11,280, giving you the chance to shelter a bit more from the taxman (if you are lucky enough to have that amount of spare cash).
While the tax free allowance has risen by £630, the banding at which you pay tax at 20% has reduced by the same amount, £630. This means that the amount at which you pay tax at 40% remains the same, £42,475. If you are lucky enough to earn above this amount and receive a pay rise then all of this will be taxed at 40%.
The tax credits system which gives people with children an extra top up has been radically changed from today. An estimated 850,000 families will lose all of their tax credit, worth £545 a year. Couples with children will now be required to work a minimum of 24 hours a week between them (previously 16 hours) to qualify for Working Tax Credits. The Institute of Fiscal Studies estimates that this will affect 212,000 low earning couples.
We hope that more of our clients benefit from the good than are caught by the bad or the ugly.