Happy new tax year – or is it???
So today is the first day of the new tax year – so what?
As from today you may find that you have a bit more or a bit less in your hand after tax depending on how much you earn, how you are paid and even where you live!
As from today the amount that anyone can earn without paying income tax has gone up to £11,850 per year.
So far so good!
If you are lucky enough (?) to be a higher rate taxpayer, the amount you can earn before moving into that 40% tax bracket goes up to £46,350 from today – provided you don’t live in Scotland.
That all sounds great doesn’t it?
Well, if you are a Scottish taxpayer the position is different for you and there are now, rather confusingly, 5 different rates of tax on earned income.
The long and the short of it is that if you earn up to £24,000 you will pay less tax than you did before and if you earn more than £24,000 you will pay more tax than you did before.
Unless you are a whizz with a calculator it will probably only become clear to you what this actually means for you once you get your pay packet at the end of April.
Just to make things even more complicated, if you are a business owner who receives dividends instead of salary, your tax rates are completely different to that outlined above.
The bad news for you is that the amount of dividends you can receive tax free in a year has just gone down from £5,000 to £2,000.
We could go into a long explanation of the different tax levels and how to understand what the best payment structure would be for you to be most tax efficient but we think that you would definitely glaze over if not actually fall asleep whilst reading it.
So, as it’s a Friday, we’re going to spare you that and let you enjoy your weekend without worrying about all this stuff
We are really happy to go into all of the detail and to help you figure out what’s the best way for you to pay yourself so that you are not losing out so if you would like to know more why not get in touch and we can chat through everything over a coffee?