As announced in the Autumn Statement, the personal allowance, which is the amount a person can earn before they pay tax on their income, is to remain at £12,750. This means as incomes and salaries increase, more people will pass the frozen threshold and be hit by more tax.
A person is taxed in line with their tax code, which determines the portion of their pay or pension income they will pay to HMRC, in the form of income tax.
There is a tax code checker tool on the Government website that can help a person find out what their current tax code is.
The checker can provide information for the current tax year, which runs from April 6, 2022 to April 5, 2023.
A person will not be able to find out their income tax amount for the current year if they pay solely through self assessment.
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A person can use the checker tool to find out:
- Tax code and Personal Allowance
- See if their tax code has changed
- Inform HM Revenue and Customs (HMRC) about changes that affect their tax code
- Update employer or pension provider details
- An estimate of how much tax they will pay over the whole tax year
- Check and change the estimates of how much income they will get from jobs and pensions.
To use the service, a person will need to sign in to their personal tax account, by providing their Government Gateway user ID and password.
An individual will need to have a Government Gateway user ID and password to create a personal tax account.
The user ID can be created when a person signs in for the first time. A person will also need their National Insurance number.
They will also need to provide details of two of the following:
- A valid UK passport
- A driving licence issued by the DVLA (or DVA in Northern Ireland)
- A payslip from the last three months or a P60 from their employer for the last tax year
- Information about their tax credit claim
- Details from their Self Assessment tax return (in the last two years)
- Information held on their credit record if they have one (such as loans, credit cards or mortgages).
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Analysts predict by April 2026, the personal allowance freezes will slash household incomes by £1,250 a year, with two thirds of adults set to pay income tax by then and 14 percent of people hit by the higher rate.
Another tax hike set to hit many working Britons is the rise in council tax. This is set by local authorities.
This year councils can choose to increase their council tax by up to three percent, with the option to add another two percent rise for social care.
Local councils can choose to increase council tax by up to three percent, with the option to add another two percent for social care, with no need for a referendum to approve the change.
Financial planning experts at Hargreaves Lansdown warned the average Band D council tax bill could increase from £1,966 a year to as much as £2,064.