During the Budget statement, the Chancellor announced what could be seen as ‘vote winning’ changes for the new tax year, starting from 1 April 2024; prestige timing before the UK election later this year. Learn more about the changes and new measures below:
New Tax Year Begins:
Date: April 6th
The start of the new tax year marks a fresh beginning for taxpayers, bringing various changes in tax codes and regulations. It’s a time to review your financial situation and prepare for any adjustments that may affect your tax obligations.
National Insurance contribution rates
Coming into place on 6 April 2024, National Insurance contributions (NICs) will be reduced by 2%. For employees, the main rate of Class 1 National Insurance contributions will be reduced by another 2%, from 10% to 8%. The main rate of Class 4 National Insurance contributions for self-employed will be reduced from 8% to 6%.
With the NIC cuts declared in the Autumn Statement 2023, these cuts reduce National Insurance rates for both employees and self-employed by a third.
Dividend tax allowances
The tax-free allowance for dividend income will be reduced from £1,000 to £500 from 6 April 2024, following last years fall from £2,000 to £1,000.
These changes could be a deciding factor for those contemplating self-employment or working through a limited company. Owners of a limited company take preference of a minimal salary plus dividends, which aren’t subject to National Insurance and are taxed at a lower rate than salary.
However, being self-employed or paying yourself with salary is attractive to some, what with the NIC reductions, and reduction in dividend allowance.
VAT registration threshold
From 1 April 2024, the VAT registration threshold was increased from £85,000 to £90,000. The threshold for deregistration has also increased from £83,000 to £88,000, meaning businesses with declining revenue are able to deregister sooner.
The increase should encourage businesses to grow. However, some may deliberately keep sales below the £90,000 threshold to avoid VAT charges on goods and services.
High-Income Child Benefit charge threshold
From 6 April 2024, the High-Income Child Benefit Charge threshold increases from £50,000 to £60,000, and the upper limit of the tapered range will increase from £60,000 to £80,000.
This should be a welcomed relief for both employed and self-employed parents.
Minimum Wage
From 1 April 2024, Minimum Wage and Living Wage increases came into effect, and the qualifying age for the National Living Wage will fall from 23 to 21. Here are the rates:
| Rate from 1 April 2024 | Rate until 31 March 2023 | % Increase | |
| National Living Wage (21 and over) | £11.44 | £10.42 | 9.8% |
| 18-20 Year Old Rate (NMW) | £8.60 | £7.49 | 14.8% |
| 16-17 Year Old Rate (NMW) | £6.40 | £5.28 | 21.2% |
| Apprentice Rate (NMW) | £6.40 | £5.28 | 21.2% |
| Accommodation Offset Per Day | £9.99 | £9.10 | 9.8% |
New research and development tax reliefs
Tax reliefs for research and development (R&D) has been simplified. From 1 April 2024, R&D Expenditure Credit and R&D Tax Relief for SMEs will merge into one R&D Expenditure Credit scheme, equal to 20% of qualifying expenditure.
Separate rules continue to apply to R&D-intensive SMEs. Where a company has qualifying R&D expenditure of at least 30% of total expenditure (40% before 1 April 2024) they are eligible for enhanced relief.
Capital Gains Tax
From 6 April 2024, the higher Capital Gains Tax (CGT) rate on residential property will be reduced from 28% to 24%.
Moving forward with the new tax year
As the new tax year approaches, it’s crucial for individuals, families, and businesses to stay informed about upcoming changes in the tax landscape. If you need help understanding any of the changes to the 2024/25 tax year, we can advise you on any variables that could possibly affect your business.
The Team
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