How the new fiscal year could affect your personal finances

With April upon us, a new fiscal year has begun. There are important changes happening that you need to be aware of to better manage your finances in 2022. These changes will affect everyone from working age to retirement, regardless of income level or net savings. In this article, we’ll outline the most impactful changes to look out for and share some tips on how to be better prepared.

Social Security contributions increase by 1.25%

Social Security contributions have risen by 1.25% for employed workers and the self-employed. The increased contributions are intended to fund social care with initial funds dedicated to helping the NHS reduce waiting times.

Instead of paying 12% on earnings up to £50,270 and 2% on any excess, employees will now pay 13.25% and 3.25% respectively. For the self-employed, rates will rise from 9% and 2% to 10.25% and 3.25%, respectively.

The national insurance threshold will rise to £12,570 in line with personal income tax relief in July, but for now it stands at £9,880.

Salary sacrifice is a way to negate this impact. When you pay products through salary sacrifice, you pay from gross salary, which means you do not pay income taxes or national insurance. Examples could include pensions, electric vehicle payments, bicycle purchases, childcare vouchers, and gym memberships.

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