National Insurance contributions or credits on your National Insurance record before 6 April 2016 will soon count towards your new State Pension.  In addition, there are changes that will affect many working people all starting on 6th April 2016.

State Pensions

Valuing your National Insurance contributions and credits made before 6 April 2016.

Your National Insurance record before 6 April 2016 is used to calculate your ‘starting amount’. This is part of your new State Pension.  Your starting amount will be the higher of either:

• The amount you would get under the current State Pension rules (which includes basic the State Pension and the Additional State Pension)
• The amount you would get if the new State Pension had been in place at the start of your working life

Your starting amount will include a deduction if you were contracted out of the Additional State Pension. You may have been contracted out because you were in a certain type of workplace, personal or stakeholder pension.

You may be able to get more State Pension by adding more qualifying years on your National Insurance record after 5 April 2016 (until you reach the full new State Pension amount or reach State Pension age - whichever is first).

Tax Rates and Tax Bands

There are no changes in the basic rate, higher rate or additional rate of taxes at 20%, 40% and 45% respectively.

The basic rate band has increased by £215 from £0-£31,785 in 2015-16 to £0-£32,000. The higher rate has increased from £31,786-£150,000 to £32,000-£150,000 where the additional rate remains at over £150,000.

Personal Allowances

From 2016-17 onwards, all individuals will be entitled to the same personal allowance, regardless of the individuals’ date of birth. This personal allowance is £11,000, an increase of £400 from 2015-16. The income limit for personal allowance remains at £100,000.

The marriage allowance has increased £40 from £1,060 to £1,100. There have been other allowances such as a dividend allowance and personal savings allowance introduced for the 2016-17 tax year.

Work place pensions

Your employer must automatically enroll you into a pension scheme and make contributions to your pension if you:

• Are aged between 22 and State Pension age
• Earn at least £10,000 per year
• Work in the UK

If your employer doesn’t have to enroll you by law, you can still join their pension scheme if you want to. Your employer cannot refuse!

For more information or advice please take a look on the government website at http://www.gov.uk

Alternatively you can seek financial advice from our recommended accountants  UHY Hacker Young Chartered Accountants

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