CONSUMER champion Martin Lewis has revealed four major money changes coming within weeks.
Chancellor Jeremy Hunt delivered the Government’s plans for the economy in the House of Commons on Wednesday.
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In the latest episode of his ITV Money Show, Martin listed off the four big elements that might have gone under the radar that will come into effect in the new tax year, from April 6.
This includes the personal allowance and tax thresholds remaining frozen, ISA limits per tax year staying the same and the Help to Save scheme being extended.
These were the big four elements he shared with viewers.
Personal allowance and tax thresholds remain frozen
In November, during his Autumn Statement, the Chancellor froze the personal allowance and higher rate tax thresholds until April 2028.
But with inflation so high and so many people’s salaries rising to counteract it, Martin warned many people could end up paying more tax through what’s known as “fiscal drag”.
This is where an increase in salary might drag you into a higher tax band.
Martin explained how this was a “big unsaid” in the Spring Budget and gave a hypothetical situation where this might happen to someone.
He said: “Lets imagine someone who earns, this year, £12,570.
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“That’s the threshold. How much tax do they pay? Zero. Nothing.
“Next year, they’ve had a 5% pay rise. They now earn £13,200 – £600 above the threshold.
“Roughly 20% of that is £120.
“So from going this year from not paying tax, next year, they’re above the threshold so they’re now paying tax. That’s fiscal drag.
“That’s how freezing the thresholds brings in money to the Exchequer.”
ISA limits staying the same
Martin explained how the limits on what you can add into some ISAs will remain unchanged from April 6 too.
ISAs are Individual Savings Accounts but the advantage of using them is that you pay no tax on the money earned from them.
Martin explained how from April 6 the standard cash ISA limit of £20,000, the Junior ISA limit of £9,000 and the Lifetime ISA limit of £4,000 are all staying the same.
Martin added: “The Lifetime ISA, which is the one for first-time buyers aged 18 to 39.
“That threshold is unchanged.
“What is also unchanged is the cap on the property you can buy is still £450,000 and there is still an effective 6.25% penalty if you are buying a house worth more than that and you want to take your money out.”
State pension and benefits rise
The state pension and a number of benefits will rise from April 6 too.
The 10.1% rise will kick in for millions of people next month and was confirmed in the Autumn Statement last year.
Mr Hunt confirmed the rise during his Spring Budget speech in the House of Commons too.
Martin explained how the 10.1% boost will impact those on a number of benefits, but on the show focussed on the state pension.
He explained: “The new full state pension will rise to around £204 a week in April.
“The old state pension, which is for people who hit state pension age before around 2016, will rise to around £156 a week.”
Help to Save extended
Martin explained how Spring Budget documents mentioned that the Help to Save scheme is going to be extended too.
The scheme is available to those on Universal Credit or Working Tax Credits.
Under it, you can get a 50p bonus from the Government for every £1 you put into your account.
You can add between £1 and £50 every month up to four years.
If you add £50 every month for the whole four years, you get £1,200 in free cash.
Martin explained: “Some news I was pleased to see. You didn’t hear it in the statement but it was in the underlying details.
“Help to Save has been extended for new applicants until April 2025. It was due to end for applicants this September.”
He added: “It is the best possible savings account there is. Nothing like it.”
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