Key Tax Changes Coming in 2024
As we start 2024, there are several notable tax changes on the horizon that will impact individuals and businesses when the new 2024/25 tax year begins on April 6th. Here’s an overview of what you need to know.
Reductions to Capital Gains and Dividend Allowances
If you own investments or are planning to sell assets like a second home, be aware that the capital gains tax-free allowance will be cut in half to just £3,000 starting April 2024. The tax-free dividend allowance is also being reduced by 50% down to £500.
So if you’re thinking of booking investment gains or taking dividends over the next year, you may want to consider realising these before April to take advantage of the higher allowances still in place for 2023/24.
ISA and Pension Allowances Frozen
The limits on ISAs, Junior ISAs and other savings accounts will stay the same in 2024/25. One change allows moving ISA funds between providers during the tax year.
In pensions, the lifetime allowance is being removed completely, meaning no cap on continuing pension contributions. But new lower limits are being set on tax-free lump sum amounts.
National Insurance Cut for Employees and Self-Employed
There’s good news on National Insurance contributions (NICs) which are being reduced from April 2024. Employees will see the NICs main rate drop from 12% to 10%. Self-employed NICs are also being cut to 8%.
Most workers should see an increase in their take-home pay as a result. Low-earning self-employed people will no longer need to pay any class 2 NICs.
Research & Development Tax Credit Schemes Merging
If your business claims R&D tax credits, be aware the separate schemes are being merged into one from April 2024. Make sure to understand any updated claims guidance ahead of the new tax year.
Business Rates Relief Extension
The 75% retail, hospitality and leisure business rates relief is being extended again into 2024/25. Small business rates multiplier freeze also continues. But the standard multiplier will increase with inflation.
Increase to National Living Wage
Finally, the government has accepted recommendations to increase the national living wage (NLW) by over 7% to £11.44 per hour from April 2024. The NLW will also apply to all workers aged 21 and over, instead of just those aged 23 and over currently.
Contact Ben Allman on ben.allman@ballardsllp.com or call 01905 794 504 for more information.
Disclaimer. This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.
