UK Tax System Changes: A Summary
The UK tax system is ever-evolving, with changes to legislation and regulations taking place on a regular basis. In recent years, the government has introduced a range of measures to make the system more efficient, fairer and simpler. In this blog post, we’ll take a look at some of the most significant changes to the UK tax system in recent times.
Income Tax Rate Reductions
One of the most significant changes to the UK tax system has been the reduction of income tax rates. In April 2020, the government reduced the basic rate of income tax from 20% to 19%, and the higher rate from 40% to 38.1%. This was a welcome move for many taxpayers, as it meant that they could keep more of their hard-earned money.
Increase in Personal Allowance
The government has also increased the personal allowance, which is the amount of income that a taxpayer can earn without paying any tax. This was increased from £11,850 in 2019/20 to £12,500 in 2020/21. This means that more people are now able to keep more of their income, and it also encourages people to work and earn more.
Another change to the UK tax system is the introduction of tax-free savings. The government has introduced a range of tax-free savings accounts, such as the Lifetime ISA and the Help to Buy ISA, which allow taxpayers to save up to £20,000 tax-free. This is a great way to save for the future, while also taking advantage of the tax benefits.
Changes to Capital Gains Tax
The government has also made changes to the Capital Gains Tax (CGT) system. The CGT rate for basic rate taxpayers has been reduced from 18% to 10%, and the rate for higher rate taxpayers has been reduced from 28% to 20%. This means that taxpayers can keep more of their profits when they sell assets, such as shares and property.
National Insurance Contributions
The government has also made changes to National Insurance Contributions (NICs). The primary threshold for NICs has been increased from £8,632 to £9,500 in 2020/21, meaning that more people are now able to keep more of their wages. The government has also increased the secondary threshold, meaning that employers will pay less in NICs.
Stamp Duty Land Tax
The government has also made changes to Stamp Duty Land Tax (SDLT). The SDLT rate for residential property purchases has been reduced from 3% to 0% up to £500,000, meaning that the cost of buying a home has been reduced significantly. This is a welcome move for many first-time buyers, as it makes it easier for them to get onto the property ladder.
The UK tax system is constantly changing, and the government has recently introduced a range of measures to make it fairer, simpler and more efficient. This blog post has provided a summary of some of the most significant changes to the UK tax system in recent times, including reductions in income tax rates, increases in personal allowance, tax-free savings, changes to Capital Gains Tax, National Insurance Contributions, and Stamp Duty Land Tax.