What's in store for the new tax year?
29 April 2024
The new tax year started over 3 weeks ago with several important changes coming into effect. Here's a reminder of what has changed:
- Dividend Allowance Reduction: The dividend allowance has been cut from £1,000 to £500.
- Halved Capital Gains Tax Exemption: The annual exempt allowance for capital gains tax (CGT) has been halved from £6,000 to £3,000. Just two years ago, it was at £12,300, marking a significant decrease.
- New CGT Rate for Property Sales: A reduced CGT rate of 24% will now apply to residential property sales, down from the usual 28% for higher-rate taxpayers. The standard 18% rate remains unchanged.
- Lower Employee National Insurance Contributions (NICs): Employee NICs have been reduced by 2% to 8%, marking the second reduction since January. This will save the average worker earning £35,400 over £900 annually.
- Frozen Tax Thresholds: Basic rate and higher rate tax thresholds remain frozen until 2028 at £12,570 and £50,271 respectively. This freeze is expected to push over a million taxpayers into the higher rate tax band, with no changes to the additional 45% threshold at £125,140.
- Lower Self-employed Class 4 NICs: The main rate of Class 4 NIC has been reduced to 6% from 9%, along with the discontinuation of the need to pay Class 2 NICs.
- Increased High Income Child Benefit Charge (HICBC): The threshold has been raised to £60,000 from £50,000, with a tapered charge for incomes between £60,000 and £80,000. Child benefit rates have also increased so the eldest child now receives £25.60 a week, all other children receive £16.95 each a week.
- State Pension and Working Tax Credit Adjustments: The state pension increased to £221.20 a week, and the basic element of working tax credit rose from £2,280 to £2,435.
- Changes to Private Pensions: New lump sum and death benefit allowances have been introduced, with the removal of the lifetime allowance.
- Rise in ATED Charges: The annual tax on enveloped dwellings (ATED) has seen a 6.7% increase from April 1, 2024, in line with the September 2023 CPI
Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA)
The Bank of England has cut the base rate to 4%. Find out what this means for trades and construction businesses, from borrowing costs to cash flow.
If you're a sole trader or landlord earning over £50,000 a year, big changes are coming your way. From April 2026, you'll need to comply with Making Tax Digital for Income Tax (MTD for ITSA) and while that might sound like it's a long way off, it’s closer than it seems. At Books and Business, we work closely with those in the trades and construction sector, and we know that admin is rarely top of the to-do list when you're running jobs, managing quotes, and keeping customers happy. But this change will affect how you keep records and report your income, so starting early is key. Lets get into what MTD for ITSA means for your business and more importantly how we can support you every step of the way.
