Each tax year new changes are often seen and keeping up to date is important to make sure you only pay the tax you need to
The government’s aim is to support people on lower and middle incomes and be seen to ‘reward work’. Some of these changes will affect the majority of British taxpayers from the 6th April 2015. As a nurse, there are a few that specifically apply to you which could reduce the amount of tax you pay now and in the future too.
General good news for all
The personal allowance amount will be increased by £600. This means that you can earn £10,600 before you have to pay any tax - £600 more than last year. This applies to everyone who was born after 5th April 1948.
The standard code for this tax year is 1060L.
- If you know anyone who is over 75, their personal allowance will be set at £10,660.
There are also some changes to the income tax rates.
- Basic rate tax at 20% will be payable on income from £0 to £31,785.
- Higher rate tax at 40% will be payable on income from £31,786 to £150,000
- Additional rate tax at 45% will be payable on any amount over £150,000.
This is a reduction in the basic rate from £31,865 last year. It also sees an increase in the starting point for higher rate tax which was £42,285.
Here’s an example. You earn £35,000 which is taxable. You have a Personal Allowance of £10,600 that you do not have to pay tax on. So £35,000-£10,500=£25,000. You pay basic rate tax of 20% on the £25,000.
There are a few other changes that might be applicable depending on your own set of circumstances:
- Savers get a bit of extra tax relief in the form of a new starting rate of tax for income from savings. This was 10% but is now 0%!
This new rate means that banks and building societies will be able to pay your tax free interest directly into your account on savings up to £5,000.
- The annual subscription limits for some Investments and Savings Accounts have been increased. The amount for Junior ISAs and Child Trust Funds has been raised by £160 to £4,000.
The standardised amount for Stocks and Shares ISAs and cash ISAs is £15,000. It is also now easier to transfer funds between the latter two types of account.
It is also predicted that there will soon be a larger number of investment options allowable into ISAs.
- If you are planning a retirement in the sun or emigration to another country, keep your eye on the results of current government consultations about Personal Allowances. They are discussing the impact of restricting the personal allowance of British expatriates to only those who “have strong economic connections to the UK”. The precise definition of this phrase is unclear and the outcome of the proposal uncertain.
We’ll let you know when we hear anything.
What about you?!
Not all of the upcoming changes from the budget will be beneficial to everybody and not all of them are applicable to you.
You cannot assume that HMRC get everything right first time and that’s why it’s important to check your own position. If your tax code is wrong then you are probably paying more than your fair share of tax.
At Tax Rebate Services we specialise in helping nurses and other healthcare workers. Over the years we’ve identified the following tax reliefs that you can claim:
- Professional fees and Union membership. For example; NMC, UNISON, and RCN fees are all eligible for tax relief;
- The travel cost of getting between different work locations. For example a community nurse traveling to patients’ homes;
- Purchasing of shoes and tights, as they are essential work wear;
- The cost of laundering your uniform if there are no laundry facilities supplied by your employer.
This article was written by Tony Shanks Operations Director at www.TaxRebateServices.co.uk