Q. I have had my payslip through and the amount of National Insurance I am paying seems to have gone up considerably. Why didn’t I hear something about this, as it seems like a tax increase?
A. I am guessing that you are a member of a pension scheme which was contracted-out of the State Second Pension. The State Second Pension (S2P), and its predecessor the State Earnings Related Pension Scheme (SERPS), have been around since 1978 providing an extra pension in addition to the basic old age pension. Over all that time it has been possible for pension schemes, and their members, to “contract-out” of the extra pension on the basis that these members are getting a pension through their scheme. This meant that both employer and employee paid a reduced level of National Insurance, but built up just the basic old age pension, with an alternative pension elsewhere. On 6th April the Single Tier State Pension was introduced combining the basic old age pension with S2P. At the same time, contracting-out was abolished and the reduced NI contributions are therefore no longer available. On the plus side, however, it is likely that you will be able to build up a bigger state pension than you otherwise would have if you had always been a member of the contracted-out scheme. To find out where you stand, I recommend you request a State Pension forecast. This can either be done online (put “state pension forecast” into your favourite search engine) or, if you are over 50, you can telephone on 0345 3000 168.
Q. I am told that I might be able to take advantage of the Marriage Allowance. What is it and who qualifies?
A. The marriage allowance came into force on 6 April 2015 and enables certain individuals to transfer up to 10% of their spouses or civil partners personal allowance to their own personal allowance. So, if you qualify, it is possible to transfer up to £1,100 of the lower earners allowance in the current tax year. To qualify, neither spouse or civil partner must have income which makes them a higher rate tax payer (so income must be less than £43,000 in the current tax year), the transferor must have some unused personal allowance (so their income must be less than £11,000 in the current tax year) and neither spouse nor civil partner must be eligible for the Married Couples Allowance (where one of you were born before 6 April 1935). If you qualify, it is very easy to register online https://www.gov.uk/married-couples-allowance/overview and each couple could save up to £220 per year in tax.
If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.
