Increase in tax threshold
Amidst another busy week in the political world, you may have missed the tax cut worth up to £330 each for 30 million workers.
On the 6th of July, a change in the threshold for making national insurance (NI) contributions meant that many workers will keep more of their take-home pay.
National insurance rose by 1.25% from 12% on the 6th of April, which meant every employee earning more than £9,880 would pay more tax.
From 6th July however, the increase in threshold means those earning less than £12,570 will now pay no employee’s National Insurance contributions.
And even up to around £40,000 per annum earners will benefit. Thresholds for the self-employed will also increase, meaning only the highest earners will be paying more whilst the lowest earners will see varying degrees of reductions.
Also, as part of the new Health and Social Care Levy, changes have been implemented for the other classes of National Insurance, affecting employers and the self-employed. In addition, the tax rates on dividends have also been increased by 1.25%, mainly to align owner-managed businesses that remunerate owners through dividends.
Increasing the National Insurance thresholds will leave around 70% of National Insurance payers in Scotland better off. If you have any questions about how this might affect you or your business, please get in touch with our team.back