April 6 came and went and with it came a host of new tax changes. Read on to learn about the new changes that may affect you.
Firstly April has seen the introduction of showroom tax. Showroom tax levies charges against vehicles that give off a high level of pollution. The charges are rated by a 13-band system (A-M) which depends on the amount of CO2 the automobile emits. The highest emitters, those in band M, would face tax fees of £950 in the first year, going to £435 after. Cars in the lowest band, band A, will have no fees at all. A fuel increase has also been brought in however what was supposed to be a direct 3p increase has now been staggered into three 1p increases throughout the year.
Income tax bands will be tightened as tax allowances are kept in stasis for 2010-11. This will lead to more people falling into the high-tax bracket. Also tax-free personal allowances will be frozen at £6,475 meaning that every taxpayer across the nation will pay an extra amount equivalent to £40.
Of course one of the biggest aspects of the new tax is the 50 percent rate for high earners. The 50 percent rate will apply to people who earn more than £150,000 per year, these high earners will also find that any income they make via dividends will be charged at a tax rate of 42.5 percent.
Pensions have seen changes too; the new schemes will enable both men and women to qualify for pensions after just 30 years of national insurance contributions, the previous number being 44 years and 39 years for men and women respectively. The age for tax-free 25 percent lump sums has increased from 50 to 55. The amount received for a basic state pension has increased by 2.5 percent however other types of pension, including second state, state earnings-related and graduated pensions, will be frozen for the next year.
Frequent flyers will also be affected by the increased air passenger duty. Despite seeing an increase in the past November, November 2010 will also bring another increase. Similarly to cars, these fees will be charged via a band system, depending on how much one travels and in what class.