Today (April 7) is the first working day of the new tax year 2014-15 and with it comes a number of changes to taxes, pensions, savings and the financial environment generally.
As of yesterday, the tax-free personal allowance rose to £10,000, a move that has been described as the most generous tax system for those on lower incomes in the G7 group of developed nations.
According to Treasury research, the move means that the UK now outstrips Germany, which had the most generous system before the increase, and also means that some 26 million people will see their tax cut by £700 a year, while three million will slip out of paying tax altogether.
Meanwhile, the rate at which people start to pay the much-debated 40 per cent income tax has now risen to £41,865, from £41,450, which means that many more so-called ‘middle income’ earners will still be paying this higher rate.
In fact, it has been estimated that more than five million people will soon be paying 40p in the pound, however, the rate of tax for people earning £150,000 or more has remained at 45 per cent.
As far as savings are concerned, the amount an individual can pay into an Individual Savings Account (Isa) has also risen, from £11,550 to £11,880, of which half can be in cash, while, from July, new rules will mean that the threshold will rise further.
Small firms will also be better off, as around 450,000 more businesses will be exempt from paying employer National Insurance Contributions, according to Government estimates, because of the new £2,000 Employment Allowance that has been brought in. While in what the Chancellor insists will be another boost for the economy, corporation tax has gone down from 23 per cent to 21 per cent.
Finally, the Lifetime Allowance for pensions, which is the value of pension benefits an individual can build up to maximise tax reliefs, has fallen to £1.25m from £1.5m.