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

MsHLBrown

Junior Member
Jan 16, 2020
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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

Diamond Member
Apr 25, 2004
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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.
 
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nakedfrog

No Lifer
Apr 3, 2001
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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

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Jul 20, 2001
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