The UK Tax Year Starts on April 6th

With the start of a new tax year in the UK on April 6th, 2024, there are some important changes that taxpayers should be aware of. The 2024/2025 tax year will bring a mix of tax rises and cuts, with a focus on supporting businesses, the self-employed, and families through changes to NICs, allowances, and rates. Individuals and businesses should review their tax affairs to ensure they are prepared for the upcoming changes

Whether you're an employee, self-employed, or a business owner, it's important to stay informed about any changes and understand how they might affect you.

Key tax changes to expect in the 2024/2025 tax year

Additional Rate Threshold

The Additional Rate Threshold has dropped from £150,000 to £125,140, which means that anyone earning above this amount will pay 45% income tax.

Capital Gains Tax

The capital gains tax allowance will be reduced from £6,000 to just £3,000 from April 2024. This means that if you make a profit from selling an asset, such as a property or shares, you will only be able to exempt up to £3,000 of the gain from Capital Gains Tax before being required to pay tax on the remaining amount.

Corporation Tax

If a company in the UK makes a profit of over £250,000, they will now have to pay more tax, as the corporation tax rate has increased to 25%. However, small companies that make profits of up to £50,000 will still only pay 19% corporation tax. This means that larger companies will have to pay a higher percentage of their profits to the government, while smaller companies will continue to pay a lower rate.

Divided Tax Allowance

The Dividend Tax allowance has been reduced from £1,000 to £500, which means that those who receive dividends above this threshold will pay more tax.

National Insurance Contributions (NICs)

The main rate of Class 1 employee NICs will be cut from 12% to 10%. The main rate of Class 4 self-employed NICs will be reduced from 9% to 8%. Self-employed workers with profits above £12,570 will no longer have to pay Class 2 NICs.

Pensions Annual Allowance

The Pensions Standard Annual Allowance has increased from £40,000 to £60,000. This means that individuals can contribute more to their pensions each year and receive tax relief.

The Pensions Lifetime Allowance has been abolished, which means that there is no longer a limit on the amount that an individual can accumulate in their pension pot without facing a tax charge.

Personal Allowance

The tax-free personal allowance for individuals in the 2024/2025 tax year in the UK is £12,570.

National Minimum Wage

The National Minimum Wage and Living Wage for those aged 21 and over has increased to £11.44 per hour.

These changes highlight the importance of staying up-to-date with tax laws and regulations, as they can have a significant impact on your finances.

Don't let the new tax year catch you off guard!

Keep a close eye on changes to taxes, pensions, energy costs, and household bills that could impact your finances. Being aware of these updates is the first step to staying financially savvy.

It's always a good idea to seek professional advice if you're unsure about how these changes affect you.

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ANDREW PASSER