The new tax year: Changes and preparations for April 2022

by Madaline Dunn

The new tax year is almost upon us, and a number of changes are coming into effect in April 2022. These changes could hit you in the pocket, so there may be some preparations you may need to make to ensure you’re ready.

From council tax, car tax, pensions and tax codes, make sure you’ve got your finger on the pulse this April. At The Salary Calculator, we’ll walk you through:

  • What is staying the same
  • Incoming changes to council tax
  • The new changes coming in for car tax
  • What’s happening with pensions
  • What to check before 5th April
  • How to work out any changes to your taxes

What will stay the same in the new tax year?

Although the new tax year often brings in changes to the amount of tax people pay, as per Chancellor Rishi Sunak’s budget, there will be a number of freezes rather than cuts.

Income tax is frozen for this year and will remain that way until 2026. So, the threshold of £12,570 will stay the same, as well as the basic rate tax of 20%, which you will pay on any earnings over that amount up to £50,270. While this may sound positive at first, according to the Centre for Economics and Business Research (CEBR), over nine million workers will pay more as a result.

However, the situation in Scotland is different, as a devolved nation, there are different rates and thresholds when it comes to income tax. Any changes can be viewed here on the Scottish government website.

Capital gains tax which people pay when they make a profit on assets such as a buy to let property, and the allowance on this tax, which is set at £12,300 is also being frozen until 2026.

What changes are coming for council tax?

In February, Chancellor Rishi Sunak announced that roughly 20 million households in council tax bands A to D in England will be impacted by a £3bn council tax rebate. According to the government, this includes 95% of rented properties and the rebate does not have to be repaid.

The same kind of scheme is going ahead in both Scotland and Wales, with the former offering a £150 council tax rebate.

According to the Local Government Association (LGA), those eligible should set up a direct debit to speed up the process. Cllr Shaun Davies, LGA’s Resources Board chairman, outlined that without taking that step, it could “take longer.” This is because the local council will have to reach out first and then individuals will have to make a claim themselves.

While those living in bands E to H in England and Scotland won’t be eligible, you can check your eligibility by visiting the government website.

What changes will come into effect for car tax?

Car tax, otherwise known as Vehicle Excise Duty (VED), is increasing in April, and the amount you pay will depend on a few factors, including how old your vehicle is and the amount of emissions it produces.

To work out how your vehicle will be affected by the new changes, head over here, where you’ll be able to work out if you’ll encounter any increases.

What’s ahead for pensions

When it comes to the changes in store for pensions, there has been a suspension of the triple lock and instead, a new double lock is being temporarily introduced.

As per the triple lock, the state pension rises in line with the highest of the following three measures every year:

  • A flat 2.5% rise
  • Average earnings growth
  • Inflation

It also applied to both the basic state pension and the new state pension. That said, the new double lock means that for 2022-23, the state pension will either rise by 2.5% or the inflation rate, which will, according to the government, last until 2023-24.

What to look out for this April

As the new tax year approaches, experts warn that people should lookout for a number of things.

The first thing to check is your tax code. While the most common tax code for the tax year 2021/22 and 2022/23 is 1257L, which will not change until 2026, it’s your responsibility to check that you’re not using the wrong one. Through checking if your tax code is correct, you’ll also be able to review whether you are owed money from HMRC or owe money.

As recently covered by The Salary Calculator, NI contributions will go up in April, too, so make sure you’re up-to-date with how the upcoming NI contribution changes will affect you.

Likewise, it has been advised that those who had to work from home during the 2020 lockdown or during the 2021/22 financial year to claim should review their entitlement to tax relief. This can be worth up to £125 from HMRC, and people are being encouraged to check what they’re owed before April 5, which could see the introduction of a rule change on claiming to work from home tax allowance.

How to work out any changes to your taxes

It’s always best to prepare for what’s in store, and if you want to check out how your finances will be affected by the upcoming changes in April, head over to The Salary Calculator, where you’ll be able to work out your take-home pay.

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Thursday, March 17th, 2022 Economy 2 Comments

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New year, new you: Rethinking finances in 2022

by Madaline Dunn

2022 is finally here, and after what has been a difficult financial time for many, you may be looking for ways that you can improve your finances, especially following the splurge of the festive season.

Thousands of people make New Year’s resolutions each year, with finances often being a key focus. However, at the same time, many who make financial New Year’s resolutions find them hard to stick to. Often this is because the resolutions people make are inflexible, extreme and ill-thought-out.

At The Salary Calculator, we’ll walk you through some top tips that can send you on your way to a more secure and safe financial future and outline some resolutions that are easier to stick to. In this article, we’ll explore:

  • Ways to build your credit
  • How to build up an emergency fund
  • How remortgaging can be helpful
  • How to tackle debt
  • How to become more financially literate
  • How to set your sights on a new job

How to build your credit

When it comes to building credit, it may not be something you thought about until you decide you want to finance a car or perhaps buy a house. The credit system essentially gives lenders information about you and your finances, and if your credit score isn’t great, this could affect your ability to, for example, buy your dream house, or may mean you’re faced with pretty rubbish interest rates.

You can start building your credit in simple ways, such as getting a credit card. After making this decision, ensuring you pay it off in full each month will help to boost your credit score. Likewise, it’s also important to use only a small percentage of your credit limit, say up to 25%, to keep your score high. The same goes for if you have an overdraft; staying far below the limit and paying it off shows your responsibility when it comes to finances.

Keeping an eye on your household bills and setting up a direct debit is also a good way to make sure your credit score doesn’t dip into the red.

Building up an emergency fund

The last two years have certainly taken a toll on many people’s finances, and in the New Year, many may be looking to prepare and safeguard against future turmoil. Each month, if you can afford it, it can be a good idea to put away a percentage of your income for a rainy day.

According to WalletHub, working towards building up an emergency fund “should be one of the first orders of business for any financial makeover.”

The best way to start is by setting out clear goals and working out what you can realistically save. This amount will vary depending on your financial situation and type of occupation.

That said, once you’ve settled on a figure you feel comfortable with, it’s important to put this money aside in an account that enables instant access, so when you need your emergency fund the most, you’re not faced with lots of red tape and barriers. When choosing your account, it’s best to take a look at what’s out there on the market, and compare and contrast. There are a number of comparison websites that can help you out here, including Compare the Market, Money Supermarket, and GoCompare.

Remortgaging in the New Year

Remortgaging in the New Year can be a great way to save money. If, for example, your deal is coming to its end, your home’s value has increased, or you want a better rate, this could be a good move for you.

According to Norton Finance, the average household can save £400 each year through remortgaging. That said, it’s important to take into consideration whether remortgaging is the right decision for you. If, for example, your financial situation has recently changed, or perhaps you’ve experienced credit issues, or if you’re already on a good rate, this may not be the move for you.

Tackling your debt

Confronting one’s debt can feel daunting, and often it can feel easier to bury your head in the sand. However, the New Year is a great opportunity to set out a plan to face your debt head-on.

Starting to pay off your credit card debt is a great step towards better financial health, and of course, becoming debt-free can be incredibly liberating. This can be done in small chunks to make it manageable.

Elsewhere, when paying off your debt, make sure to prioritise what needs to be paid off first. Consolidating your debt can be helpful here, too, if you have different loans and credit card balances. If you’re unsure about how to go about this, speaking to financial experts can be a great way of accessing guidance.

Become more financially literate

Becoming more financially literate can make a world of difference to your life. Research shows that, in fact, few people are financially literate (just one in three in the UK).

Better financial literacy can help you to set better financial goals, invest your money more wisely, and save more efficiently. Whether it’s checking out the latest finance podcast, hitting the books or using financial management tools, accessing this kind of knowledge can place more control in your hands, help you avoid debt, and keep an eye out for risky investments and fraud.

There are some great podcasts out there that can help you on your way to becoming more financially savvy, including BiggerPockets Money, Future Rich, and Money 101, which provide down-to-earth, accessible guidance and top tips, making finances less intimidating.

Meanwhile, if you’re looking to get your nose stuck into some books, Money: A Users Guide – Laura Whateley, Real Life Money: An Honest Guide to Taking Control of Your Finances by Clare Seal, and Manage Your Money Like a F*cking Grown-Up’ y Sam Beckbessinger, may help to give you a fresh perspective on finances.

Seeking out a better paying job

The New Year is the perfect opportunity to seek out a fresh start job-wise. You may be aware that you’ve got as far as you can in your current role, and perhaps you’re not receiving the kind of wage packet that your skills entitle to you. Say goodbye to rubbish pay in the New Year, and take on the adventure of a new job. Reports even show that January is the best time of year to lookout for a new job!

That said, when looking for a new job, it’s also important to take into consideration a few different factors. Look inwards, and ask yourself why you’re seeking a new role, what kind of skills you have to bring to a new role, and what jobs do you expect to be eligible for. It’s always great to be ambitious and strive for something new and exciting, but be sure that you’re realistic in your approach, too.

Take a look at your CV and resume, ensure they’re up-to-date and in tip-top condition. This will allow you to put your best foot forward. Branch out on Linkedin, too. Connections are never a bad thing, and networking can even help you access a contact that could lead to you landing your dream job. Of course, practice interview tips as well, especially if it’s been a while since you last did an interview! This way you’ll be able to speak confidently about your abilities, experience and accomplishments and win over your interviewer.

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Tuesday, January 11th, 2022 Economy 2 Comments

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