Can someone explain the upcoming changes to income tax please in 2021?

[MsHLBrown]

I have recently started working for a software company and as it is an entry level role, the salary is lower than my previous salary. I am trying to project my earnings, potential savings etc over the next few years. I looked online at https://www.gov.uk/government/publi...l-allowance-and-basic-rate-limit-from-2019-20 and it says the income tax will be the same until next April then its being set against the CPI - consumer price index. I have read up on it but dont fully understand. Does this mean if the price of things goes up, as it usually does that the tax rate and allowances will go up too? If my salary does not increase proportionate to inflation, I fear I would have to leave and would have wasted over a year gaining experience there. Can someone explain this to me fully please? I currently earn £20,000 so only have to pay £1,500 a year so I basically earn £18,500, according to https://www.income-tax.co.uk/. If it changing to this new CPI thing how will that effect my take home salary? Many thanks

 

[deadlyapp]

I think you'll find that most of the people here are from the US and not the UK and therefore will have very little input.

However - what they are stating is that yes, as the cost of goods (consumer price index) goes up, then they are expecting that salaries similarly increase and that the tax rate and allowances will correspondingly adjust. For most people this should mean that there is no impact, because your allowance will increase and therefore no net change to take home salary when you file. At least that's my understanding.

 

[nakedfrog]

Yes, I'm curious what led you to create an account on this particular forum to ask UK tax questions. Did a Google search lead you here?

 

[IronWing]

We do know everything and we’ll tell you about it.

 

[sdifox]

It means you have to wire me 100 quids.

 

[nakedfrog]

It means you have to wire me 100 quids.

I hope they're dyslexic and you end up with a large shipment of cephalopods.

 

[RadiclDreamer]

It means you have to wire me 100 quids.

Ew squid is nasty

 

[sdifox]

Ew squid is nasty

Squids are delicious. And I said quids.

 

[nakedfrog]

Squids are delicious. And I said quids.

Isn't it still "quid" when it's plural?

 

[sdifox]

Isn't it still "quid" when it's plural?

I wouldn't know. I am just faking it. You are killing the joke

 

[nakedfrog]

I wouldn't know. I am just faking it. You are killing the joke

Or am I saving it?

 

[sdifox]

Or am I saving it?

I like frog soup as well.

 

[IronWing]

I like frog soup as well.

That’s not the best way to eat frog.

 

[nakedfrog]

I don't think I like where this is going.

 

[IronWing]

I don't think I like where this is going.

I think you'll like it most muchso.

 

[nakedfrog]

Well, maybe if it has a happy ending.

For me, specifically.

 

[IronWing]

What's the best way to eat frog?

Spoiler

With one leg hooked over each ear like a pair of spectacles.

 

[nakedfrog]

I'm on board!