Increased personal allowances

Chancellor George Osborne has confirmed that the basic personal allowance for 2014-15 will be £10,000, despite earlier speculation the threshold could be increased in line with Liberal Democrat policy aims say Harris & Co accountants Northampton.

In the Autumn Statement, Osborne said the ‘higher rate threshold’ will be £41,865. For 2014-15, there are no changes to the percentage rate of contribution for Class 1, Class 1A, Class 1B and Class 4 National Insurance Contributions (NICs) but there are changes to all of the thresholds and limits.

The weekly rates for Class 2 and Class 3 NICs will be increased. The Class 1 Upper Earnings Limit (UEL) and the Class 4 Upper Profits Limit for NICs will continue to be aligned with the point at which higher rate tax becomes payable £41,865.

Osborne also announced that from October 2015 a new class of voluntary NICs (Class 3A) will be introduced. This option is designed to give those who reach state pension age before 6 April 2016 an opportunity to boost their additional state pension.

In addition, from the same date employers will no longer be required to pay Class 1 secondary NICs on earnings paid up to the Upper Earnings Limit (UEL) to any employee under the age of 21.

On tax credits, Osborne announced that the disability elements of tax credits will be increased in line with CPI of 2.7% from 2014-15, with other rates are increased by 1%. The family element of child tax credit is not increased annually and remains at £545. Child benefit will increase by 1%, and the Guardian’s Allowance will increase in line with CPI of 2.7% .