1. National Insurance threshold rise*
a. For 2020-21, the Class 1 National Insurance threshold will be £9,500 a year, up from £8,632 a year – putting £104 back in the pockets of lower earners
2. Minimum wage rise (effective from 1 April 2020)**
a. The new rate of pay will rise from £8.21 to £8.72 for workers over the age of 25, an increase of 6.2 per cent
3. State Pension increases by 3.9%***
a. New State Pension will increase to £175.20 per week in 2020/21
b. Basic State Pension will increase to £134.25 per week in 2020/21
c. Increases from £168.6 and £129.2 respectively
4. Pension Lifetime Allowance increases by 1.7%****
a. For 2020/21 the LTA is rising in line with September’s inflation figure of 1.7% to £1,073,100.
Steven Cameron, Pensions director at Aegon comments: “These are challenging times for everyone and many people will be feeling the financial effects of the coronavirus. However, a number of changes have come into effect which will offer some much needed good news to a diverse group of people.
“There are two sets of changes that particularly benefit lower and average income workers. The first is that the National Insurance threshold has risen from £8,632 to £9,500 which means those under this threshold will now no longer pay any NI whatsoever. This will save a lower/average earner around £104 a year. Coupled with the rise in the National Minimum Wage and the National Living Wage on 1 April, this should provide a little extra to help to employees facing financial difficulties at this time.
“An inflation busting rise in the state pension should also offer state pensioners some cheer as they see weekly payments increase by 3.9% in line with the triple lock, with the New State Pension rising to £175.20 per week and the Basic State Pension rising to £134.25 per week.
“The pensions Lifetime Allowance dictates how much an individual is allowed to save in a pension without incurring additional tax charges. The allowance is rising to £1,073,100 which sounds like a huge sum but many middle and higher earners who have been saving through a defined benefit pension for many years will benefit from this change. This could include many civil servants as well as senior nurses and doctors.”
* https://www.gov.uk/government/news/31-million-taxpayers-to-get-april-tax-cut
** https://www.gov.uk/national-minimum-wage-rates
*** https://commonslibrary.parliament.uk/research-briefings/cbp-8806/
****https://www.gov.uk/government/publications/budget-2020-documents/budget-2020 (2.28 – Pension Tax)
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