April's tax and price changes at a glance
Monday 6 April marked the start of the new tax year, which means a host of changes to tax and state benefits.
Unusually, this year sees the Budget delivered after the start of the new tax year. Chancellor Alistair Darling will unveil his Budget on 22 April, 16 days into the tax year 2009/10. Commentators say this indicates that there will be no major changes to either income tax or National Insurance.
Changes to tax and benefits
* For many people, the most significant change is the 5% increase in the basic state pension. Individuals will see their weekly income increase from £90.70 to £95.25.
The government reviews the basic state pension each April and has the option to increase it in-line with the Retail Prices Index the previous September.
* Pension Credit also increased to £130.00 a week for individuals and £198.45 for couples.
* Meanwhile, Personal Allowances (the amount you can earn before you have to start paying income tax) has increased from £6,035 to £6,475. People aged over 65 will now have a Personal Allowance of £9,490, up from £9,030.
* The income level at which National Insurance must be paid has increased from £5,435 a year (or £105 a week) to £5,715 (or £110 a week).
* People earning more than £40,000 could see their National Insurance (NI) contributions increase. Previously, NI was payable at 11% of the first £40,400, but from 6 April this changes to 11% of the first £43,875 and 1% thereafter.
* Expectant mothers can now claim a one-off tax-free cash bonus of £190. The new Health in Pregnancy Grant (HiPG) is intended to help pregnant mothers stay healthy in the run up to the birth, and help meet some of the costs of parenthood.
The grant, which is not dependable on household income and will not affect any other benefits, is available to expectant mothers in the UK from the 25th week of pregnancy. It is payable for each pregnancy, not each baby. Pregnant women with a due date after 6 April 2009 can claim their £190 by picking up a form from their midwife or doctor. Your midwife or doctor must fill in their part of the form and sign it before giving it to you.
You must then send the form to Customs and Revenue within 31 days of it being signed. The money will be paid directly into your bank account.
* Parents collecting child tax credit will get a slight boom this new tax year as this rises from £2,085 to £2,235. Pension credit, meanwhile, rises from £124 a week to £130 for individuals. Couples will see their pension credit increase from £189 to £198.
* Inheritance tax also faces a tweak. The threshold after which this 40% tax must be paid increases to £325,000, up from £312,000.
* Finally, flexible working has been extended to include parents of children under 16, who now have the right to request flexible hours. However, although these requests must be considered by employers, there is no obligation. Previously, only parents with children under the age of six had to right to request flexible working hours.
* Homeowners looking to sell their property will now have to have a Home Information Pack (HIP) in place before they can put their home on the market. Previously, a HIP only had to be commissioned before a house could be put up for sale.
* Royal Mail has increased the cost of a first class stamp from 36p to 39p and a second class stamp from 27p to 30p. The price of special next-day delivery, meanwhile, has risen from £4.65 to £4.95 for mail up to 100g.
* Prescription charges in England increased from £7.10 to £7.20 on 1 April. Pre-paid prescription certificates – which can save you money if you need a regular prescriptions - have also risen in price. A three-month certificate now costs £28.25, up from £27.85, while annual certificates have increased from £102.50 to £104.
* Cancer patients no longer have to pay for prescriptions.
* Dental charges in England also increased on 1 April. The cost of a check-up for Band 2 treatment - such as a filling or root canal - has risen from £44.60 to £45.60. A check-up, meanwhile, now costs £16.50, up from £16.20.
* From 1 April, the cost of a colour television licence increased from £139.50 to £142.50. A black and white licence, meanwhile, rose from £47 to £48.
* The average taxi fare in London increased by 3.4% from 4 April. Transport for London says the increase will help drivers maintain their earnings and cover increased operating costs.
* Workers’ statutory paid holiday entitlement increased on 1 April, from 4.8 weeks (or 24 days for a worker working a five-day week) to 5.6 weeks of paid holiday (or 28 days).
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.
The tax levied on the total value of your estate after you die. IHT has to be paid by the beneficiaries of your estate before they can receive any of the money from it. The money can’t be taken from the value of the estate _– it has to be paid before any money can be released. There is an IHT threshold – known as the “nil-rate band” – below which no tax is levied (£325,000 in 2011/12). Any amount above the nil-rate band is subject to tax at 40%. If your estate totals £600,000, there is no tax on the first £325,000; however your estate will pay 40% tax on the remaining £275,000, a total of £110,000. Prudent tax planning can reduce your IHT liability, so always consult a specialist solicitor.
Child tax credit
A scheme started in 2003 that sought to replace a raft of other tax credits and benefits, the payout depends on the number of dependant children in a family, and its level of income. The amount of credit is reduced as income increases. It is payable to the main carer of a child, usually the mother, and is available whether or not the recipient is working.