Workers urged to bank income tax savings announced in the budget

31 Oct, 2018

31 Oct 2018 Yorkshire Building Society is urging UK tax payers to increase their financial resilience by cashing in on the Chancellor’s Budget income tax giveaways and saving the money they would have had to pay to the Inland Revenue.

Chancellor Philip Hammond announced on Monday that the Personal Allowance will rise to £12,500 from April 2019, saving UK basic and higher rate tax payers £130 per year, while the higher rate tax threshold will increase to £50,000, saving those playing the 40% rate a further £730 annually (£860 in total).

Since 2010, successive Budget announcements have seen the threshold for paying basic rate (20%) tax rise from £6,475 to £11,850 in April this year.4 Meanwhile, over the past five years, the higher tax rate threshold has increased from £41,451 to £46,350.

Yorkshire Building Society has calculated that basic rate tax payers who had managed to save all the tax they would have paid with each increase in the personal allowance since 2010 would have accumulated over £5,000 extra in savings.

This is an opportunity for thousands to take steps towards achieving what the Prime Minister described as the “peace of mind” which comes with savings.

Although other fiscal changes in those Budgets will have affected household incomes, the Yorkshire says putting away the Personal Allowance giveaway is a good opportunity to get into the savings habit.

Tanya Jackson, Head of Corporate Affairs, at Yorkshire Building Society, said: “Today’s change to the personal allowance means that UK workers who pay basic rate tax will be £130 better off from April next year.

“Yorkshire Building Society is urging workers who can to save their tax breaks. A basic-rate taxpayer who had deposited the money they’d saved from changes to the personal allowance since 2010 would now have an extra £5,434 in their savings account.

“Savings in relation to household disposable income are at the lowest levels since 1963 and 16.8m people have less than £100 in savings. As a mutual provider committed to helping our members overcome any financial hurdles they may encounter, we want to help people establish a regular savings habit to build their financial resilience.”

Savers can use this interactive calculator to see how much the personal allowance changes could help them save.