Tax rates 2023/24, 2022/23 and 2024/25 budget  









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Vic Woodhouse

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2024/25 budget 06-Mar-2024

Extracts:
an additional 2p reduction to the main rates of employee and self-employed NICs from 6 April 2024
...
• Abolishing the current tax regime for non-UK domiciled individuals, replacing the outdated concept of domicile with a simpler residence-based regime. Under the new regime, anyone who has been tax resident in the UK for more than four years will pay UK tax on foreign income and gains, as is the case for other UK tax residents. This is a much simpler and clearer test, with less scope for ambiguity than the current system. The new regime will no longer rely on the remittance basis, removing a source of complexity that incentivises individuals to keep income and gains offshore in the current system.
• Announcing the end of the Alcohol Duty Stamps scheme following a review by HMRC. Removing the scheme represents a simplification for the spirits industry which has faced associated cost burdens and complexity.
• Abolishing the Furnished Holiday Lettings (FHL) tax regime from 6 April 2025, meaning short-term and long-term lets will be treated the same for tax purposes. Individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.
• At Autumn Statement 2023, the government announced the removal of the requirement to pay Class 2 NICs and committed to abolishing Class 2 entirely. The government will consult on the details of the reform later this year.

  • VAT: increase the registration threshold to £90,000 and the deregistration threshold to £88,000 from 1 April 2024.
  • Capital Gains Tax: cut higher rate for property from 28% to 24% from 6 April 2024.
  • Starting Rate for Savings: maintain at £5,000 for 2024-25.
  • Business Rates: extend the Empty Property Relief ‘reset period’ from six weeks to three months (thirteen weeks) from 1 April 2024.


Child benefits; budget 06-Mar-2024 update

Child benefit rates Tax year 2024/25 Tax year 2023/24
Higher rate (eldest child only) (per week) £25.00 £24.00
Other children (per week) £16.95 £15.90
Higher income per year of either partner - no - 0% of Child Benefit repayable £60,000 50,000
Higher income per year of either partner - all - 100% of Child Benefit repayable £80,000 £60,000
Between the two: Excess income as a percentage of the difference % of £20,000 % of £10,000
So if income is: £61,000 £51,000
Benefit repayable: £1,000/£20,000 = 5% £1,000/£10,000 = 10%
Unfair application of the limits
It is not fair that a household with two parents each earning £49,000 a year (2024/25 £59,000 a year)
will receive Child Benefit in full, while a household earning less overall
but with one parent earning over £50,000 (2024/25 £60,000 a year) will see some or all of the benefit withdrawn.

The government is committed to removing this unfairness and moving to a system
based on household rather than individual incomes by April 2026, and will consult in due course.

2024/25 Government rates and allowances - full details


Income tax rates: England, Wales & Northern Ireland (non-dividend income) Tax year 2024/25 Tax year 2023/24 Tax year 2022/23
Personal allowance £12,570 £12,570 £12,570
0% starting rate for savings only Up to £5,000 Up to £5,000 Up to £5,000
Interest - Personal Savings Allowance - Basic rate £1,000 £1,000 £1,000
Interest - Personal Savings Allowance - Higher rates £500 £500 £500
20% basic rate tax £12,571-£50,270 £12,571-£50,270 £12,571-£50,270
20% Construction Industry Scheme CIS deduction rate 20% all labour earnings 20% all labour earnings 20% all labour earnings
40% higher rate tax £50,271-£125,140 £50,271-£125,140 £50,271-£150,000
45% additional rate tax Above £125,140 Above £125,140 Above £150,000
Dividend income allowances and tax rates Tax year 2024/25 Tax year 2023/24 Tax year 2022/23
Dividend allowance tax free £500 £1,000 £2,000
Dividend income basic rate 8.75% 8.75% 8.75%
Dividend income higher rate 33.75% 33.75% 33.75%
Dividend income additional rate 39.35% 39.35% 39.35%
Higher rates apply to total annual income and capital gains above: £50,270 £50,270 £50,270
Additional rates apply to total annual income (but not capital gains) above: £125,140 £125,140 £150,000



Capital gains tax CGT - Residential property Tax year 2024/25 Tax year 2023/24 Tax year 2022/23
CGT Rate - basic rate tax payer – Residential property 18% 18% 18%
CGT Rate - higher rate tax payer – Residential property 24% 28% 28%
Annual CGT exemptions – individuals (per year on combined Residential property and other capital gains)
In the year of sale; this does not accumulate over years
£3,000 £6,000 £12,300
Higher rates apply to total annual income and capital gains above:
For Capital gains tax, there is no additional rate above the 24%/28%.
£50,270 £50,270 £50,270
If you only own one property, which has always been your main residence, Private residence relief applies to the whole period, no Capital gains tax is payable and 60 day procedures do not apply.
An Additional relief on capital gains on a Residential property which has BOTH been your main residence AND has been let for part of the time on a commercial basis. Not applicable if it has been let during the period of ownership without being your main residence.
Private residence relief: Actual period of residence plus, in the period prior to disposal 9 Months 9 Months 9 Months
Lettings relief: the Lower of Private residence relief or £40,000 has not been available since 6th April 2020.
When gains are below the Annual exemption and sale proceeds are below four times the Annual exemption there is no need to declare the disposal.
If sales are over four times the Annual exemption, do declare the sales; even if profits are below the CGT Annual exemption.
Sales from 06/04/2020 you also need to use the 60 day reporting procedure in these circumstances.
£12,000 £24,200 £49,200
Where 60 day procedures apply, the Capital gains tax computation also needs to be included in your annual self assessment tax return.
The tax payable may be slightly different depending on how accurate your estimate of other income has been in the 60 day calculation of tax.
More or less may be payable at the CGT Rate - higher rate; see above.



Capital gains tax CGT - Other Tax year 2024/25 Tax year 2023/24 Tax year 2022/23
CGT Rate - basic rate tax payer 10% 10% 10%
CGT Rate - higher rate tax payer 20% 20% 20%
Annual CGT exemptions – individuals (per year on combined Residential property and other capital gains)
In the year of sale; this does not accumulate over years
£3,000 £6,000 £12,300
Higher rates apply to total annual income and capital gains above:
For Capital gains tax, there is no additional rate above 20%.
£50,270 £50,270 £50,270
Gains on shares are subject to capital gains tax.
Dividends on shares are paid gross and are taxable at dividend rates, subject to normal allowances.
Bonds issued by the UK government are known as gilts. Capital gains from selling a gilt or when it is redeemed are not subject to capital gains tax.
Interest is paid gross and is taxable, subject to normal allowances.
Funds withdrawn from a company which has been struck off at Companies House. Tax year 2024/25 Tax year 2023/24 Tax year 2022/23
Maximum treated as Capital Gain £25,000 £25,000 £25,000
Any excess is taxed as income.



Tax rates after the Chancellors autumn statement 22-Nov-2023

  • Income tax
  • The income tax additional rate threshold will reduce from £150,000 to £125,140 from April 2023. Reducing these thresholds will cost £1,243 for an additional rate taxpayer.
  • Personal tax thresholds – ie personal allowance, basic and higher rate thresholds for income tax – are maintained until April 2028 at a current level of £12,570 and £50,270.
  • Basic rate of income tax will be maintained at 20%. This was previously announced to be reduced to 19%, which will not go ahead from 2023.
  • Other income tax allowances
  • Married Couple’s Allowance and Blind Person’s Allowance will be uplifted by 10.1%, from 6 April 2023.
National Insurance 2023/24
from 06/01/2024
2023/24 2022/23 2021/22
Class 1 PAYE
Class 1 Employees
Lower earnings limit, primary class 1 (perweek)
Class 1 - Lower earnings limit LEL, primary Class 1, minimum earnings to qualify for
State pension and payroll benefits
- set up a PAYE scheme at this level (per week)
If you already have a PAYE scheme you do not have to enter employees paid below this
level but you still need to check the:
⚫ Employee right to work in UK under Prevention of Illegal Working regulations and
⚫ Apply minimum wage regulations.
applied on a weekly basis, except for directors (per year)
Same £123 £123 £120
Lower earnings limit, primary class 1
This is the minimum rate of income to build up qualifying years for State Pension.
Same £6,396 per annum £6,396 per annum £6,240 per annum
Primary threshold (per week)
* Employees start paying NI above this point.
applied on a weekly basis, except for directors (per year).

from 6 April 2022 to 5 July 2022

from 6 July 2022 to 5 April 2023
Same £242



£190

£242
£184
Employee’s primary class 1 rate between primary threshold and upper earnings limit

From 6 April 2022 to 5 November 2022

From 6 November 2022 to 5 January 2024
reduced 6 January 2024 to April 2024 then subject to The Budget on 06/03/2024




10%




12%


13.25%

12%




12%
Upper earnings limit, primary class 1 (perweek)
* Employees pay a lower rate of NI above this point
Same £967 £967 £967
Apprentice upper secondary threshold (AUST)for under 21s/25s Same £967 £967 £967
Employee’s primary class 1 rate above upper earnings limit

from 6 April 2022 to 5 November 2022

from 6 November 2022 to 5 April 2023
Same 2%

2%

2%
Class 1 Employers
Secondary threshold (per week)
* Employers start paying NI above this point
but claim Employment allowance
Same £175 £175 £170
Secondary threshold - Company owner/director tax and NI free salary for the company
but added to the directors' personal income and may be taxable in Self Assessment
depending on the director's other income.
Same £9,100 per annum £9,100 per annum £8,840 per annum
Employer's secondary class 1 rate above secondary threshold
There is no upper limit.


from 6 April 2022 to 5 November 2022

from 6 November 2022 to 5 April 2023
Same 13.8%



15.05%

13.8%
Employment allowance (per year/employer)
* Employers claim the current month applicable amount
of Employment Allowance against your employer’s national insurance contributions.
Same £5,000 £5,000 £4,000
You cannot claim Employment Allowance if both of the following apply:
You're a company with only one employee paid above the Class 1 National Insurance secondary threshold and
The employee is also a director of the company.
Class 1 Employees - Married woman’s reduced rates
Married woman’s reduced rate between primary threshold and upper earnings limit

from 6 April 2022 to 5 November 2022

from 6 November 2022 to 5 April 2023




3.85%




5.85%


7.1%

5.85%
Married woman’s rate above upper earnings limit

from 6 April 2022 to 5 November 2022

from 6 November 2022 to 5 April 2023




Same




2%


3.25%

2%




2%
Class 2 Self employed
Class 2 rate (per week where profits are above lower profits limit threshold)

Proposal to be abolished 22/11/2023

Same

£3.45


£3.15
£3.05
Class 2 smallprofits threshold (per year) Same £6,725 £6,725 £6,515
Lower profits limit
New from 2022/23; Self employed are credited with one qualifying year for State Pension when profits exceed
the smallprofits threshold but do not have to pay Class 2 National Insurance unless profits exceed the lower profits limit
Same £12,570 £11,908 not applicable
Class 3 voluntary contributions
Class 3 voluntary rate (per week) Same £17.45 £15.85 £15.40
Class 3 voluntary rate to build up qualifying years for State Pension Same £907.40 per annum £824.20 per annum £800.80 per annum
Class 4 Self employed
Class 4 lower profits limit Same £12,570 £11,908 £9,568
Class 4 upper profits limit Same £50,270 £50,270 £50,270
Class 4 rate between lower profits limit and upper profits limit 8% 9.73% 9.73% 9.00%
Class 4 rate above upper profits limit Same 2.73% 2.73% 2.00%
Class 1A/1B - Class 1 benefits
Class 1A/1B NIC Same 14.53% 14.53% 13.8%
  • National insurance
  • The national insurance thresholds for all classes will be maintained until April 2028 at the current level.
  • The government will fix the level at which employers start to pay Class 1 Secondary NICs for their employees (the Secondary Threshold) at £9,100 from April 2023 until April 2028.
  • The employment allowance is set to the current level of £5,000.
  • The temporary 1.25% increase from 6 April 2022 in national insurance rates has been abandoned from 6 November 2022.
  • The Health and Social Care Levy is no longer going ahead.
  • The introduction of a separate Health and Social Care Levy tax in April 2023 has been cancelled too.



Workplace Pension Scheme Tax year 2023/24 Tax year 2022/23 Tax year 2021/22
Category 1 employees - Have a right to join a Workplace pension scheme But employee-only contributions. Ages 16 to 74 Earning up to 6,240 per annum
520 per month
Earning up to 6,240 per annum
520 per month
Category 2 employees - Have a Right To Opt In to a Workplace pension scheme - employee and employer contributions Ages 16 to 74 Earning over 6,240 per annum
520 per month
Earning over 6,240 per annum
520 per month
Category 3 employees - Automatic Enrolment employees are Aged 22 to State Pension Age.
Enroll within six weeks of the employee start date.
Earning above 10,000 per annum
833.33 per month
Earning above 10,000 per annum
833.33 per month
Earning above 10,000 per annum
833.33 per month
Directors are exempt from Automatic Enrolment into a Workplace Pension Scheme unless there are two or more directors who have contracts of employment. Most one-man companies or family companies do not have directors with contracts of employment.
Workplace pensions Minimum contributions are:
Employer Minimum Contribution 3% 3% 3%
Employee Minimum Contribution 5% 5% 5%
Total Minimum Contribution - Employer and Employee combined 8% 8% 8%
On earnings in excess of the Lower level of qualifying earnings 'threshold': 6,240 per annum
520 per month
6,240 per annum
520 per month
Deductions from the employee are from the figure after tax and national insurance deductions.
The employee gets tax relief at the income tax standard rate: So with the standard rate at 20%, when the employee contribution is £100.00 the deduction will show on the payslip as £80.00; this is calculated as £100.00 less 20% = £80.00. £100 goes into the pension pot.
The employer gets tax relief by including amounts paid, as employer contributions, in annual Financial Statements and Corporation Tax returns.
Depending on the rules of the scheme, the employee can pay-in less as long as the employer puts-in enough to meet the Total Minimum Contribution.



Employee vehicles: Mileage Allowance Payments (MAPs) Tax year 2023/24 Tax year 2022/23 Tax year 2021/22
Car - first 10,000 miles - per mile 45 pence 45 pence 45 pence
Car - subsequent miles - per mile 25 pence 25 pence 25 pence
Motorcycle - per mile 24 pence 24 pence 24 pence
Cycle - per mile 20 pence 20 pence 20 pence
VAT registered traders may reclaim VAT on the fuel element using HMRC fuel mileage rates according to fuel type and engine size.



Tax interest on late payment Late payment % pa
From 22 August 2023 7.75%
From 11 July 2023 7.50%
From 31 May 2023 7.00%
Linked to changes in the Bank Rate.



State pension income Tax year 2024/25 Tax year 2023/24 Tax year 2022/23 Tax year 2021/22
The basic State Pension if you reached State Pension age before 6 April 2016 - per week £156.20 £156.20 £141.85 £137.60
The new State Pension if you reached State Pension age on or after 6 April 2016 - per week
a man born on or after 6 April 1951 or a woman born on or after 6 April 1953
£221.20 £203.85 £185.15 £179.60
Increase basis on prior year Average weekly earnings
AWE 8.5%
Triple lock policy
Consumer Prices Index
CPI 10.1%
Triple lock policy
Consumer Prices Index
CPI 3.1%
Triple lock policy
Triple lock base
2.5%
Triple lock policy
The triple lock policy is the higher of Average weekly earnings AWE, Consumer prices index CPI, Retail price index RPI or 2.5%.
New State Pension paid pro rata by qualifying years; 10 years minimum; 10/35ths entitlement; 35 years maximum full entitlement.
There is no benefit in paying more than 35 years.
If you defer drawing your State pension:
The basic State Pension is increased by 10.4% for each year you defer.
The new State Pension is increased by 5.8% for each year you defer.
Pro rata increases for periods of less than one year.

Check your State Pension qualifying years using the Government Gateway


Apply for a Government Gateway
• You first enter your email address.
• You get back a confirmation code which you use to move forward with the application.
Have available:
• Unique Taxpayer Reference UTR - if you have one.
• National Insurance number.
• Driving license or passport details to link you into other Government records.
• There are various security checking options; you have to choose two. The driving license and passport options are the most straight-forward.
• Telephone number.
• You need to be ready to receive text or email security numbers from HMRC.
Apply: "Create sign in details" on the Sign in screen.
• You get a Government Gateway number.
• Set the Password.
• You are then ready to use the Government Gateway.

About setting up your Government Gateway.


From the Chancellors autumn statement 17-Nov-2022

  • National Living Wage
  • From 1 April 2023, the government will increase the National Living Wage (NLW) by 9.7% to £10.42 an hour, for those aged 23 and over.
  • Dividend allowance
  • Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018.
  • Dividends above the dividend allowance were taxed at 7.5% (basic rate), 32.5% (higher rate), and 38.1% (additional rate). From 6 April 2022, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate)
  • Inheritance tax
  • Inheritance tax nil-rate band and residence nil-rate band – thresholds are maintained at the current level until April 2028.
  • The inheritance tax nil rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, while the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2m.
  • Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1m without an inheritance tax liability.
  • Capital gains tax: reduce the annual exempt amount
  • The annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023 then £3,000 from April 2024.
  • SDLT
  • Stamp Duty Land Tax (SDLT) cuts for England and Northern Ireland will remain in place until 31 March 2025. On 23 September 2022, the government increased the nil-rate threshold of SDLT from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000.
  • The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a temporary SDLT reduction which will remain in place only until 31 March 2025.
  • Corporation tax
  • From April 2023, the planned increase in the corporation tax rate to 25% for companies with over £250,000 in profits will go ahead. Small companies with profits up to £50,000 will continue to pay corporation tax at 19%.
  • Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.
  • Annual Investment Allowances
  • Annual Investment Allowance has been confirmed at a permanent rate of £1 million from 1 April 2023.
  • Research & Development
  • For expenditure incurred on or after 1 April 2023, Research and Development (R&D) tax reliefs will be changed as follows:
  • the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%
  • the SME credit rate will decrease from 14.5% to 10% and
  • R&D expenditure credit rises from 13% to 20%.
  • Car tax
  • The chancellor has announced electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.
  • Company car taxes are under review and are going to be set up until April 2028 to provide long term certainty for taxpayers and industry in Autumn Finance Bill 2022. Rates will continue to incentivise the take up of electric vehicles:
  • appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1 percentage point in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars
  • rates for all other vehicles bands will be increased by 1 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28.
  • VAT
  • The VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1 April 2024.
  • Annual Tax on Enveloped Dwellings
  • The annual chargeable amounts for the ATED will be uplifted by the September CPI figure of 10.1% for the 2023-24 ATED charging period.
  • Online Sales Tax (OST)
  • The government has clearly stated that it has decided not to introduce an OST, an idea put forward by certain stakeholders in the context of business rates reform. The government’s decision reflects concerns raised about an OST’s complexity and the risk of creating unintended distortion or unfair outcomes between different business models.
  • This does bring a degree of certainty in future planning for many online retailers and – along with the rates reforms announced – clarity for those with fixed retail premises.
  • Help for energy costs
  • The current Energy Price Guarantee provides support for household and business energy bills until 31 March 2023. Support for households will continue from April 2023 though support will be less generous and based on a higher average usage price cap of £3000 (up from £2,500) per annum, with additional targeted support for vulnerable households.
  • Further detail about eligibility for support for businesses can be found here. ACCA members have helpfully provided feedback to shape the detailed delivery of the business support scheme and today’s announcement suggested the final details would be published before the end of the year.
  • Business Rates
  • The Chancellor confirmed that the planned revaluation for England will proceed in April 2023. At revaluation, property values used to calculate non-domestic rates are updated to reflect the property market (in this case to reflect values as at 1 April 2021). Current values have been in effect since April 2017, and are based on market values as at April 2015.
  • The Chancellor also confirmed that a transitional rates relief scheme, which phases in changes associated with new values, will be in place for 3 years following the revaluation.
  • The business rates multiplier will be frozen in 2023-24, while relief for 230,000 businesses in retail, hospitality and leisure sectors was also increased from 50% to 75% next year;
  • Revaluations are also expected to take effect in April 2023 in Scotland and Wales however poundage rates and any other decisions relating to revaluation and non-domestic rates are expected to be announced by the Welsh and Scottish Governments in their respective budgets, expected in mid-December
  • A variety of other non-domestic rates relief may be available but businesses will need to check with their local council here:
          https://www.gov.uk/apply-for-business-rate-relief
  • Access to finance – eligibility for start-up loans
  • As previously announced, the business secretary has widened eligibility of the start-up loans scheme to businesses trading for up to three years as follows:
  • start-up loans of up to £25,000 are now available to start-ups that have been trading for up to three years, up from two years
  • new ‘second loans’ available for businesses that have been trading for up to five years
  • These loans provide much-needed support for the UK’s innovators and entrepreneurs. Find out more here.
  • Recovery loan scheme
  • The Recovery Loan Scheme, launched in April 2021 to help businesses recovering from the pandemic, has been extended to 2024. Details of the scheme and eligibility criteria can be found on the British Business Bank website FAQs.
  • Government grants to install electric vehicle charge points
  • You can potentially claim 100% of the costs of installing an electric vehicle charging point as a capital allowance. The government will legislate in Spring Finance Bill 2023 to extend the 100% First Year Allowance for electric vehicle charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.
  • Scotland and Wales
  • More detailed information about the impact on devolved budgets will be expected when the Welsh and Scottish governments announce their budgets, expected to be on 13 and 15 December, respectively.
Talk to us about Personal tax, National Insurance and Business taxes for more info at our local Accountants in Ealing branch
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