The 2023/24 tax year is coming to a close in less than a month, but are you ready for the upcoming tax changes? The UK Government is introducing several new tax measures in April and it’s important to understand how the changes could impact you and your business.
Keep reading to find out what’s new in 2024/25, how to stay compliant, and how some careful planning can help you optimise your tax position.
What’s changing in April?
National Insurance
In addition to the National Insurance cuts and the abolition of Class 2 National Insurance contributions (NICs) announced in the 2023 Autumn Statement, many taxpayers will see their NI rates fall by a further 2p in April.
From 6 April, the main rate of employee NI will fall from 10% to 8%. Meanwhile, the main rate of Class 4 NICs for self-employed workers will drop from 9% to 6%.
With less than four weeks to go until the cut, it’s essential for employers to reflect these changes in their payroll systems as soon as possible. You should also ensure that you adjust your payroll to reflect the new National Living Wage rise. Take a look at our payroll services or speak to one of our advisers to find out how we can help.
VAT threshold rise
Many SMEs will welcome the upcoming rise in the VAT threshold. Under current legislation, businesses with a turnover of more than £85,000 in any 12-month period must register for VAT by law.
However, the threshold is increasing by £5,000 to £90,000 from 1 April 2024, potentially reducing the administrative burden for thousands of UK firms.
Capital gains tax (CGT)
April 2024 will see two significant changes to capital gains tax (CGT).
Firstly, the CGT-free allowance will halve from £6,000 to £3,000 for the 2024/25 tax year. That means that a greater proportion of sales completed in April 2024 will be subject to a CGT charge. This is a significant change from just a couple of years ago in 2022/23 when the annual allowance was £12,300.
However, it’s not all bad news, especially for landlords and property investors. In his Spring Budget 2024, Chancellor Jeremy Hunt announced a cut to the higher CGT rate on residential property disposals from 28% to 24%. According to the Government, this could boost the housing market by incentivising earlier disposals of buy-to-let properties and second homes.
Dividend allowance
If you extract profits from your limited company, you should be aware of the changes to dividend allowance.
Currently, the first £1,000 of income from dividends is entirely free from tax. However, this is falling to just £500 in 2024/25. As such, it may be wise to review how you take an income in the new tax year.
ISAs
At the moment, individuals can only use one of each type of ISA each tax year. However, this is changing in 2024/25. From 6 April 2024 onwards, you’ll be able to pay into multiple ISAs of the same type.
The Government is also currently consulting on how to implement a new UK ISA. This type of savings account will add a further £5,000 allowance on top of the existing £20,000 ISA allowance.
Pensions
Prior to 2023/24, the lifetime allowance (LTA) on pension savings was £1,073,100, with any savings over that figure triggering an extra charge.
While this charge was removed in 2023/24, the LTA will be officially scrapped in April.
Are you ready for the changes?
Whether you need someone to help you with your corporate tax planning or you’re drawing up a personal tax strategy, knowing how these changes will impact you is crucial.
At P B Sydall, we stay up to date with the latest tax legislation so you don’t have to. As your accountants, it’s our job to keep you in the loop with any developments that could impact your finances or tax liabilities, ensuring you stay compliant and optimise your tax position at all times.
Contact us today to find out how we can prepare you for tomorrow.