April 2014

2014 Budget

Later today, the Chancellor will deliver his 2014 Budget to parliament, setting out his plans for the next few years. The Budget is the Chancellor’s opportunity to explain his policies and how they will affect the economy as a whole, and also what differences will be felt by ordinary members of the public.

He is likely to make much of the fact that the tax-free personal allowance (how much you can earn without paying income tax) has increased to £10,000 from April 2014, a coalition pledge delivered 1 year early. There is also talk that he might announce plans to raise the threshold for 40% tax (the amount at which you start paying income tax at 40% rather than 20%) in future years. This would probably lower the tax paid by those in middle management positions, say, and those in more senior roles.

The income tax and National Insurance rates which will take effect from 6th April 2014 have already been applied to The Salary Calculator, so you can easily see how your take home pay will be affected by the new tax year. You can also view a side-by-side comparison of 2013 and 2014 so you can see where the differences come from.

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April 2014 tax rates applied

The Salary Calculator has been updated with the latest tax information which takes effect from 6th April 2014.

There is an increase in the default tax free personal allowance from £9,440 to £10,000, which will reduce the amount of tax due for most taxpayers. Slight increases in the National Insurance thresholds will also help improve the takehome pay for many people.

The most significant change is probably the increase in the repayment threshold for plan 1 student loans from £16,365 per year to £16,910, which will save those repaying their loan nearly £50 over the year. Unfortunately of course, this will just mean it will take longer to repay the loan in the long run but hopefully the extra cash in your pocket will be useful now!

Another significant change this year, which is unlikely to affect any but those who are well paid and nearing retirement, is a reduction in the maximum amount you can put into a pension while still claiming full tax relief – for 2013/14 this limit was £50,000 but from 2014/15 it will be £40,000. If this is likely to affect you, you still have time to make the most of the 2013/14 pension allowance before the end of the tax year!

To see how you will be affected by the new tax rates, go to The Salary Calculator and choose the 2014/15 tax year from the drop-down box. Alternatively, you can view a side-by-side comparison of 2013 and 2014 tax rates.

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