A new tax year: What you need to be aware of
The start of a new tax year can be a confusing time for both individuals and businesses, with a raft of changes (both good and bad) coming into force. The 2024/25 tax year, which started on 6 April, is no different.
In order to help you understand where you stand, we’ve summarised below the changes which may have an impact on you.
- Employee National Insurance – Following the Class 1 employees’ rate cut on 6 January, another 2% reduction has now come into effect. This means the rate now stands at 8% (originally 12% prior to 6 January).
- Self-employed National Insurance – The rate for self-employed individuals has now dropped to 6% from 9%.
- Minimum wage – Workers aged 21 and above are now entitled to the National Living Wage rate of £11.44 per hour. This was previously £10.18 for workers over 21 years old and £10.42 for those over 23.
- High income child benefit charge - The £50k tapering threshold has increased to £60k and the top taper threshold has risen from £60k to £80k with the clawback being 1% for every £200 of income over £60,000. The charge will be reformed from April 2026, moving to a fairer “household based” assessment.
- Capital Gains Tax (CGT) - The rate of CGT on residential properties has been reduced from 28% to 24% for higher rate taxpayers. CGT is paid on the gain when a residential property which is not the individual’s main residence is sold or disposed of. In addition to this, the CGT allowance has also been cut by £3,000, meaning it’s now £3,000 (£6,000 for 2023/24). This was £12,300 in the 2022/23 tax year, so there’s been a significant reduction over the past few years.
- Tax-free dividend allowance – The amount tax-free now stands at £500. This was also reduced from £2,000 to £1,000 in the previous tax year.
- Individual Savings Accounts (ISAs) – While a £20,000 investment limit applies over the tax year for each ISA, individuals are now able to open more than one cash ISA. It’s also now possible to complete partial transfers between ISA providers during the tax year, with it originally only being possible to move the full investment amount.
We are always here to help
If we are responsible for submitting your tax return, then your usual advisor will be in touch over the coming weeks to advise you of this year’s process and provide advice to help you optimise your tax position. However, it’s also important that you ensure you’re aware of all tax reliefs and allowances you may be entitled to so that you can flag these accordingly - as well as where you stand in relation to any changes that came into force from 6 April.
If you would like to discuss your specific circumstances and any possible tax saving measures, please get in touch with a member of our specialist team or your usual Azets advisor.
