Latest news with #PersonalAllowance
Daily Record
a day ago
- Business
- Daily Record
New call to increase Personal Allowance to £25,000 for all pensioners
The Personal Allowance is set to remain frozen at £12,570 until April 2028. Income tax rises for Scots in April - how the changes affect you A new online petition is calling on the UK Government to increase the personal tax allowance from £12,570 to 'at least £25,000' to help support pensioners in retirement. The Labour Government announced earlier this year that the Personal Allowance will remain frozen at £12,570 until April 2028. Petition creator Rosemary Grey argues that raising the income threshold would 'support our older citizens, many of whom have already contributed by paying tax during their working life'. The e-petition has been posted on the UK Government's Petitions Parliament website. At 10,000 signatures of support it would be entitled to a written response from the UK Government, at 100,000, it would be considered by the Petitions Committee for debate in Parliament. The latest figures from the Department for Work and Pensions (DWP) show there are now 13 million people of State Pension age across the country. The current official age of retirement is 66 and set to rise to 67 between 2027 and 2028. HM Revenue and Customs (HMRC) data indicates that 8.7m pensioners are projected to pay income tax on their retirement income in 2025/26. It marks an increase of around 420,000 compared to the previous year (2024/25) and a rise of 1.85m from 10 years ago (2015/16). The full annual New State Pension reached £11,973 in 2025/26, tipping hundreds of thousands more pensioners into paying income tax. The UK Government has also confirmed it will honour the Triple Lock policy during this parliamentary term. However, this could see everyone on the full, New State Pension pushed over the tax threshold in just two years' time. David Brooks, head of policy at leading independent consultancy Broadstone, said: 'We would expect a growing number of pensioners to be liable for income tax as the country's demographic changes due to our ageing population. 'Fiscal drag, however, is also bringing hundreds of thousands more pensioners into paying Income Tax bracket every year as the frozen Personal Allowance thresholds combines with the Triple Lock-protected State Pension. 'While perhaps personally frustrating for many pensioners, it reflects the nature of inflation linked occupational pensions and a Triple-locked State Pension that continues to rise.' He added: 'The government will be called on again to protect pensioners from this impact but with seemingly few ways to control the rise in pensioner incomes, taxation is the only tool left. 'We should also expect the income tax from pensioners to rise in coming years as more income will be taken from pensions. Taking pension income is the key way to protect pension benefits from the impact of the Inheritance Tax Rules on unspent pension funds due to come in from April 2027.' Under the Triple Lock policy, the New and Basic State Pensions increase each year in-line with whichever is the highest between the average annual earnings growth from May to July, CPI in the year to September, or 2.5 per cent. It is aimed at preventing the value of the State Pensions being whittled away by cost of living pressures. The New and Basic State Pensions increased by 4.1 per cent in April, however, future forecasts from the Labour Government expect it to rise by 2.5 per cent over the next four financial years. Using these calculations, it puts the full New State Pension on track to be worth £12,578.80 in the 2027/28 financial year - £78.80 over the Personal Allowance. While the amount of State Pension to be taxed may seem relatively small - tax is only paid on the amount over the Personal Allowance - older people with other income streams could find themselves having to part with more cash to pay a tax bill - if it's not automatically deducted from private or workplace pensions through PAYE. Online guidance at on who might need to pay tax on their pension also includes a handy tool to calculate how much tax someone might need to pay, and the different ways this can be done. The latest State Pension Triple Lock predictions show the following projected annual increases: 2025/26 - 4.1%, the forecast was 4% 2026/27 - 2.5% 2027/28 - 2.5% 2028/29 - 2.5% 2029/30 - 2.5% State Pension payments 2025/26 Full New State Pension Weekly payment: £230.25 Four-weekly payment: £921 Annual amount: £11,973 Full Basic State Pension Weekly payment: £176.45 Four-weekly payment: £705.80 Annual amount: £9,175 Future new State Pension forecasts Under a 2.5 per cent increase, the full New State Pension will be worth: 2026/27 - £236 per week, £12,227.30 a year 2027/28 - £241.90 per week, £12,578.80 a year What is taxed Guidance on states: 'You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates. Your total income could include: the State Pension you get - Basic or New State Pension Additional State Pension a private pension (workplace or personal) - you can take some of this tax-free earnings from employment or self-employment any taxable benefits you get any other income, such as money from investments, property or savings Check if you have to pay tax on your pension Before you can check, you will need to know: if you have a State Pension or a private pension how much State Pension and private pension income you will get this tax year (April 6 to April 5) the amount of any other taxable income you'll get this tax year (for example, from employment or state benefits) You cannot use this tool if you get: any foreign income Marriage Allowance Blind Person's Allowance Use this online tool at to check if you have to pay tax on your pension. The full guide to tax when you get a pension can be found on here.
Yahoo
04-07-2025
- Business
- Yahoo
HMRC's rent-a-room scheme allows higher personal tax allowance
The UK's HMRC is offering an enhanced Personal Allowance of up to £20,070 ($27,388.7) for individuals who take advantage of the rent-a-room scheme as part of their self-assessment tax return. This comes as a response to the freeze on Personal Allowance income tax thresholds, which are set to remain unchanged until at least 2028, reported the Express. The standard income tax Personal Allowance is currently £12,570, which is the amount one can earn before being liable for income tax. With the thresholds frozen, more individuals are expected to fall into higher tax brackets due to inflation, a situation known as 'fiscal drag'. Consequently, there is a growing interest in legal avenues to increase tax allowances. The rent-a-room scheme permits taxpayers to earn up to £7,500 tax-free from renting out a furnished room in their home. This is in addition to the standard Personal Allowance, potentially raising the threshold to £20,070. The scheme aims to assist taxpayers in stretching their finances further amidst the fiscal drag. However, the additional allowance under the scheme is only applicable to income from a room rented out in the taxpayer's main residence, not buy-to-let properties. Taxpayers must declare this income to HMRC via a self-assessment tax return. If the income from the rented room is below £7,500 (or £625 per month), it is exempt from tax. By leveraging the rent-a-room scheme, taxpayers can enjoy the standard Personal Allowance plus an extra £7,500 without incurring income tax on this amount. Taxpayers also have the option to opt out of the scheme and have their rent-a-room income taxed in the usual way. This could be advantageous in certain situations, such as when a loss is incurred from renting the room, allowing the individual to offset this loss against their tax liability on another property, stated the report. "HMRC's rent-a-room scheme allows higher personal tax allowance" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Record
01-07-2025
- Business
- Daily Record
HMRC urges people earning money through side hustles to sort out tax returns now
If you earn more than £1,000 from additional income, you may need to register for Self Assessment. Income tax rises for Scots in April - how the changes affect you Anyone earning extra income through a side hustle is being urged to check if they need to register for Self Assessment and if so, file their tax return now. HM Revenue and Customs (HMRC) is encouraging people with additional income streams - from online selling and content creation to dog walking and property rental - to understand their tax obligations and get ahead of the January deadline rush. HMRC said the £1,000 income threshold is key - anyone who earns more than this from their side hustle in a tax year may need to register for Self Assessment and complete a tax return. This includes gains or income received from cryptoassets. Anyone who thinks they may need to complete a tax return for the 2024 to 2025 tax year can use the checker tool on to find out. New entrants to Self Assessment must register to receive their Unique Taxpayer Reference. Easy-to-use guides for side hustlers can be found on here. Myrtle Lloyd, HMRC's Director General for Customer Services, said: "Whether you are selling handmade crafts online, creating digital content, or renting out property, understanding your tax obligations is essential. If you earn more than £1,000 from these activities, you may need to complete a Self Assessment tax return. "Filing early puts you in control - you will know exactly what you owe, can plan your payments, and avoid the stress of the January rush. You don't need to pay immediately when you file - you have until 31 January to settle your tax bill." The deadline to submit a Self Assessment tax return online and pay any tax owed for the 2024 to 2025 tax year is January 31, 2026. Early preparation is particularly important for sole traders or landlords with a qualifying income over £50,000, as they will also need to get ready to start using Making Tax Digital (MTD) for Income Tax from April 2026. This will require digital record-keeping and quarterly updates using compatible software. The full guide to paying tax if you're earning more than £1,000 on a side hustle can be found here. Online petition A new online petition is calling for the basic rate of tax to be cut from 20 per cent to 10 per cent for all workers earning less than £50,000 per year. Petition creator Holly Millar is also urging the UK Government to increase the Personal Allowance from £12,500 to £15,000. The petition, posted on the Petitions Parliament website, states: 'We believe many are struggling financially. In our view, prices are too high, food and basic necessities cost too much, bills are increasing, people are having to choose between having a warm house or food. 'We believe young people can't afford to live independently as this could due to the current Personal Allowance. We believe the government needs to start thinking about the public and their needs.' The Personal Allowance has been frozen at £12,570 since the start of the 2021/22 financial year, however, earlier this year the UK Government announced it will rise with inflation from April 2028. At 10,000 signatures of support the petition will be entitled to a written response from the UK Government. At 100,000 it would be considered by the Petitions Committee for debate in Parliament.
Scottish Sun
24-06-2025
- Business
- Scottish Sun
Millions on state pension could get £634 DWP boost next year – check if you're eligible
Read on to find out how else you can boost your state pension. PENSION HELP Millions on state pension could get £634 DWP boost next year – check if you're eligible Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) MILLIONS of people could get a cash boost of over £600 to their state pension next year. The benefit is on track to increase by 5.3% - or £634 - in 2026, according to the latest Triple Lock forecasts. Sign up for Scottish Sun newsletter Sign up 1 State pensioners could be in line for a cash boost next year. Credit: Alamy The Triple Lock system sees the state pension rise each year in line with whatever is highest out of: wages from May to July, 2.5% or September inflation. Latest ONS wage growth figures stand at 5.2% for regular earnings (excluding bonuses) and 5.3% for total earnings (including bonuses). If wage growth holds until September, when the Triple Lock is calculated, then this would be the figure used to increase the state pension. That would mean the new state pension would rise by £634 next year, from £11,973 to £12,607. This means that state pension payments would topple over the £12,500 Personal Allowance threshold. This is the amount you can earn before paying tax. This means pensioners would have to pay tax on part of their state pension income, meaning they would essentially have to hand some of the benefit straight back to the tax man. Who is eligible for state pension boost? The state pension age is currently 66, so people born after April 5, 1951 and women born after April 5, 1953 will be in line for a boost from the Department of Work and Pensions (DWP) next year. Hargreaves Lansdown head of retirement analysis Helen Morrissey told The Sun: "The triple lock aims to increase the state pension by whichever is the highest of 2.5%, inflation or average wages. "If we were in line to get an increase in the range of current average wages (5.3%) then that would be applied to those receiving the new state pension as well as the basic state pension. "However, for those who also receive top ups such as the additional state pension it's worth saying that these extra elements are not increased using the triple lock -instead they are increased by CPI inflation. "The key inflation and wage figures used for the triple lock calculation won't be released until Autumn so we will wait to see what direction both figures go in." The state pension age is set to gradually increase starting from May next year, and will be set at 67 from March 6, 2028 onwards. The change will affect millions of people born between April 6, 1960 and April 5, 1977. Other ways to boost your state pension Delay your state pension Delaying your pension if you don't need it straight away could set you up for a bigger payout later. Scottish State Pensioners to Receive Winter Fuel Payment Boost in 2025 You'll need to defer for at least nine weeks. But for every nine weeks you delay your pension, you'll get a 1% increase on the amount you receive, according to This means that for every year you delay, you'll boost your payout by almost 5.8%. The extra amount will be paid out by DWP with your regular State Pension payment. Claim NI credits If you're a parent getting Child Benefit for a child under 12, you automatically receive National Insurance (NI) credits. However, if you're a grandparent looking after a child so their parent can work, the parent can sign a form to pass on their NI benefits to you. Pension credit Millions of people who are eligible for pension credit do not claim it, and the DWP estimates that up to £2.1 billion in Pension Credit goes unclaimed every year. Pension Credit gives you extra money to help with living costs, such as the Winter Fuel Payment, if you're over state pension age and on a low income. You can start your application for Pension Credit up to four months before you reach state pension age. You can also apply any time after you reach pension age, but your application can only be backdated by three months. You can check if you're eligible on the government website. Pension Credit explained Pension Credit is a benefit which gives you extra money to help with your living costs if you're on a low income in retirement. It can also help with housing costs such as ground rent or service charges. You may be able to get extra help of you're a carer, have a disability, or are responsible for a child. It also opens up access to lots of other benefits such as the warm home discount scheme, support for mortgage interest, council tax discounts, free TV licences once you're over 75, and help with NHS costs. To qualify, you need to be over state pension age and live in England, Scotland or Wales. If you have a partner, you need to include them on your claim. Pension Credit tops up: your weekly income to £218.15 if you're single your joint weekly income to £332.95 if you have a partner However, even if your income is higher, you might still qualify if you have a disability or caring responsibilities. There is also another element to Pension Credit called savings credit. To get this, you need to have saved some money towards your retirement. You can get an extra £17.01 a week for a single person or £19.04 a week for a married couple. If you have more than £10,000 in savings, the government uses a calculation to work out how much it adds to your income. Every £500 over £10,000 counts as £1 income a week. For example, if you have £11,000 in savings, this counts as £2 income a week. Do you have a money problem that needs sorting? Get in touch by emailing money-sm@ Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
Wales Online
24-06-2025
- Business
- Wales Online
DWP state pension set to rise by £634 in 2026 for millions of Brits
DWP state pension set to rise by £634 in 2026 for millions of Brits The new state pension was introduced in 2016 and applies to all men born after April 5, 1951 and women born after April 5, 1953. People receiving the state pension are expected to get an income boost (Image: Mike Kemp, In Pictures via Getty Images ) Millions of people receiving the state pension are expected to get an income boost of more than £634 a year from April 2025, thanks to the latest Triple Lock forecast. The increase would apply to those on the full new state pension — introduced in 2016 — which covers all men born after April 5, 1951, and women born after April 5, 1953. The Department for Work and Pensions (DWP) is mandated by the Triple Lock system to escalate the state pension sum each year. The increase must align with either inflation, wage growth, or a minimum of 2.5%, depending on which is greater. Recent Consumer Price Index (CPI) data, which informs the inflation component of the Triple Lock, indicates that pensioners might see a favourable annual increment of 5.3%. According to the most recent figures from the Office for National Statistics (ONS), the CPI report states: "Annual growth in employees' average earnings was 5.2% for regular earnings (excluding bonuses) and 5.3% for total earnings (including bonuses).", reports the Express. Should wage growth persist at these levels until September, when the Triple Lock assessment is conducted, it would translate into a 5.3% enhancement to pension payouts next year. Article continues below For money-saving tips, sign up to our Money newsletter here Aaron Peake from CredAbility, a personal finance specialist, has shed light on the anticipated increase in state pension for 2026, suggesting that earnings growth is currently outpacing inflation and is likely to influence the adjustment. Peake elucidates: "Right now, earnings growth is slightly ahead of inflation, so that's the frontrunner for determining the rise in 2026." He goes on to provide an estimate based on current trends, saying: "If we take current wage growth figures of around six per cent, that's the ballpark for next year's state pension increase." Currently, individuals entitled to the full state pension receive £11,973 annually. Under the assumption of a 5.3% surge, the increase would result in an additional £634.60 per year. This enhancement would boost weekly payments from the present £230.25 to approximately £242.45, culminating in an annual sum of £12,607.60. This projected hike gains further significance as it would propel these payments over the £12,500 Personal Allowance threshold for the very first time. Consequently, this means pensioners would face taxation on a segment of their state pension income, even without any other financial inflows. The determination of the triple lock for 2026 will rest upon the May to July measurements of wage growth and inflation, leaving room for potential variation. As mandated by the system's design, there will be a minimal elevation of 2.5%, translating into an extra £299.33 each year for those on the full new state pension. However, should wage growth or inflation rates climb higher than this minimum, they will form the basis for the calculation, using whichever contribution is greatest. Article continues below
