The 2024/2025 tax year is upon us, which means you’ve officially completed one quarter of this year, well done.
This is an excellent time to reflect and review your progress against plans and forecasts for the year so far. But firstly, you should get up to date on what the new tax year means for you.
We’re back with another annual round up to help you navigate what’s new and what your business needs to be aware of during the 2024/2025 tax year.
Here’s everything that’s changing.
National Insurance
Employees will now see a reduction in their National Insurance contributions. The main rate drops from 10% to 8%, saving the average worker earning £35,400 over £900 a year. This comes on top of a previous 2% cut announced last Autumn.
The main rate of National Insurance for the self-employed has now been further reduced from 9% to 6%. This saves an average self-employed person earning £28,000 around £650 a year.
National Living Wage
The National Living Wage (NLW) for workers aged 21 and over has risen by £1.02 (or 9.8%) to £11.44 per hour. This is an increase from the previous rate of £10.42.
There’s also a rise in the National Minimum Wage (NMW) for those aged 18-20. They will now earn £8.60 per hour, which is an increase of £1.11 (or 14.8%) from the previous £7.49.
R&D and SME Schemes
Businesses can now claim tax relief for research and development under a single, simplified scheme.
This new merged scheme combines the previous RDEC (for larger companies) and SME schemes into one. We put together more info on 2024 R&D changes you need to be aware of.
Capital Gains Tax
As of April 2024, the annual exempt amount for Capital Gain Tax has been cut from £6,000 to £3,000.
As announced in March 2024, during the budget, the government is making it cheaper to sell second homes and buy-to-let properties by cutting the Capital Gains Tax (CGT) rate.
The tax on profits from selling these types of properties has been reduced from 28% to 24%. The tax rate for any gains that fall within the basic income tax band will remain at 18%. This change aims to increase the number of these properties being sold, potentially boosting the housing market.
Dividend Allowance
The tax-free dividend allowance has been halved from £1,000 to £500.
Pension Lifetime Allowance
The State Pension received a significant boost and has risen by 8.5%, following the triple lock policy.
This increase means those receiving the full new single-tier State Pension will see their weekly payment go up from £203.85 to £221.20.
Separately, the lifetime allowance for pension savings has been abolished from April 6th, 2024. This could offer more flexibility for some people saving for retirement.
The annual pension allowance stays at £60,000 for 2024/25.
ISA limits
Historically savers were limited to paying into only one ISA during a tax year. However, this has now changed, and there’s no longer a limit. You can spread your tax-free savings across multiple ISAs.
Need help navigating the changes?
We’re here to help throughout the 2024/2025 tax year. If you need more advice, feel free to Get in touch.
