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Millions set for a pay rise as tax thresholds go up

More than two million people are set to get a pay rise thanks to increases to the national living and minimum wage, according to the treasury.

The national living wage is going up from £7.83 to £8.21, adding up to an extra £690 a year for those working full-time and helping around 1.8 million people.

The national minimum wage will go up to £7.70 per hour for workers aged between 21 and 24, and £6.15 per hour for those aged between 18 and 20.

Altogether, 2.1 million people are set to get a pay rise, the treasury said.

It comes as tax and pensions changes come into effect on Saturday, with more than 30 million people set to benefit from an increase to the personal allowance and higher rate threshold.

As the new financial year begins, the tax-free personal allowance has been increased from £11,850 to £12,500, meaning an extra £130 for the typical basic rate taxpayer.

The upper threshold has also been increased to £50,000 – an extra £495 for the typical higher rate taxpayer.

In addition, the treasury has announced a freeze on fuel duty for the ninth year in a row and made increases to work allowances for the much-maligned universal credit scheme, designed to help families with the cost of living.

Mel Stride, financial secretary to the treasury, said the changes came after a spring budget designed “for the strivers and the workers who keep the country going”.

But not everyone will notice a heftier bank account from this month, with minimum contributions into workplace pensions heading up to 8%.

Staff will have to make up 5%, which previously was the total minimum contribution, with employers contributing the rest.

Hargreaves Lansdown calculates the increase could mean an average worker sees an extra £30 leave their April pay packet to cover the cost of pension contributions.

But the income squeeze could make the 10 million people automatically enrolled into workplace pensions better off in the long run, with an extra £55,000 potentially sitting in a 22-year-old’s pension pot by the time they retire.

Article source: http://news.sky.com/story/millions-set-for-a-pay-rise-as-tax-thresholds-go-up-11685071

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