Insights into the changes for the New Tax Year.
The new tax year began on April 6th, ushering in revisions to tax rates, thresholds, and regulations. Our insights into the changes in the new tax year help individuals and businesses anticipate alterations and their potential impacts.
For individuals, changes in tax rates and thresholds directly affect disposable income and financial planning. Understanding adjustments to income tax rates, allowances, and reliefs empowers informed decisions on savings, investments, and expenditure. Modifications to tax credits, benefits, and reliefs may alter eligibility, necessitating a thorough review of financial circumstances.
Similarly, businesses must track tax regulation changes for compliance and optimising tax positions. Adjustments to corporation tax rates, capital allowances, and reliefs impact profitability, investment decisions, and cash flow management. Alterations to VAT thresholds, employment taxes, and other levies may require recalibrating pricing strategies, budgeting processes, and staffing arrangements to adapt to the evolving tax landscape.
The employee rate for Class 1 National Insurance Contributions (NICs) is to decrease once more starting April 6th, 2024, following a reduction earlier in the year. For individuals earning between £12,570 and £50,270, the NIC rate will be 8% from April 6th, 2024. Meanwhile, the higher employee NIC rate of 2% on earnings exceeding £50,270 will remain unchanged.
Employers, on the other hand, will continue to pay NIC at a rate of 13.8% on their employees’ earnings.
The employee rate for Class 1 National Insurance Contributions (NICs) is to decrease once more starting April 6th, 2024, following a reduction earlier in the year. For individuals earning between £12,570 and £50,270, the NIC rate will be 8% from April 6th, 2024. Meanwhile, the higher employee NIC rate of 2% on earnings exceeding £50,270 will remain unchanged.
Employers, on the other hand, will continue to pay NIC at a rate of 13.8% on their employees’ earnings.
The primary rate of Class 4 NIC, applicable to self-employed individuals, will decrease to 6% on profits ranging from £12,570 to £50,270 starting April 6th, 2024. However, the Class 4 NIC rate will remain at 2% on profits exceeding £50,270.
The annual exempt amount, which represents the threshold for chargeable gains before tax is applicable, will decrease starting April 6th, 2024. For individuals and personal representatives, the AEA will be reduced to £3,000, while most trustees will see their AEA lowered to £1,500.
Effective April 6th, 2024, the Capital Gains Tax rate on residential property disposals for individuals, trustees, and personal representatives subject to higher tax rates will decrease to 24%. This reduction applies specifically to those paying tax at a higher rate on residential property disposals.
There are no alterations to the existing lower rate of Capital Gains Tax (CGT) for basic rate taxpayers on residential property disposals. This rate will remain steady at 18% following the changes taking effect from April 6th, 2024.
Commencing from April 1st, 2024, the threshold for VAT registration will be raised to a taxable turnover of £90,000. Additionally, businesses generating less than £88,000 will have the option to apply for de-registration from the VAT scheme, effective April 1st, 2024.
Starting April 6th, 2024, the dividend allowance will be reduced to £500. This adjustment pertains to the amount of dividends that individuals can receive before being subject to taxation on dividends.
Individuals will have the flexibility to contribute to more than one type of ISA. Furthermore, savers will gain enhanced mobility in transferring funds between providers to seek better investment returns.
The annual ISA limit remains at £20,000, including a £4,000 limit for a Lifetime ISA, starting from April 6th, 2024. Moreover, a consultation is underway regarding the introduction of a new UK ISA, potentially providing individuals with an additional £5,000 ISA limit.
As of April 6th, 2024, the threshold for the HICBC is set to rise to £60,000. Consequently, individuals earning below this threshold will be exempt from paying tax on their child benefit income. Moreover, the taper rate will be halved, meaning individuals earning between £60,000 and £80,000 will incur a tax charge. Those earning above £80,000 will be subject to a tax charge equal to their child benefit income.
While the HICBC rules will continue to be based on individual income, plans are in place to introduce fairness by considering household income starting in April 2026.
Effective April 1st, 2024, revisions to the National Minimum Wage and adjustments to the National Living Wage will take effect. Starting from this date, the National Living Wage will be applicable to workers aged 21 and over.
| Rate from April 2024 | |
|---|---|
| National Living Wage | £11.44 |
| 18-20 Year Old | £8.60 |
| Under 18 Rate | £6.40 |
| Apprentice Rate | £6.40 |
How can ABS Accountancy can Assist You?
ABS Accountancy provides insights into the changes for the new tax year and boasts a proactive and seasoned team ready to address your tax planning requirements efficiently. To explore your available options further, don’t hesitate to contact our team of experts today via telephone or through our convenient online contact form.
Disclaimer: The content included in this blog post is based on our understanding of tax law at the time of publication. It may be subject to change and may not be applicable to your circumstances, so it should not be relied upon. You are responsible for complying with tax law. Individual circumstances do vary, and if you feel that the information provided is beneficial, you must seek professional independent advice. If you take action as a result of reading this article before receiving our written endorsement, we do not accept any responsibility for any financial loss incurred.
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