A number of tax changes have been made in various recent budgets that take effect from April 2024. It is easy to lose track of them, so here is a reminder.
Capital gains tax annual allowance
The tax-free allowance for individuals for all capital gains will be reduced from £6,000 to £3,000. This is an annual allowance and based on total gains, not an allowance per asset disposed of. If it is not used, the allowance is lost.
Capital gains tax rate
The current rates on the sale of residential property are 18% and 28%. This will change to 18% and 24%. All other capital gains rates will remain the same.
Council tax
Most of us will have received our new council tax bills and these have all gone up.
Dividend tax free allowance
The rate is reduced from £1,000 to £500. Dividends in this band are at 0% tax. If it is not used, the allowance is lost.
High Income Child Benefit Charge
The threshold to pay back child benefit will increase from £50,000 to £60,000. The ceiling at which it will fully have to be paid back will increase from £60,000 to £80,000.
This remains as an individual income in the household. It is the higher paid individual that needs to pay it back even if they are not the one who receives it. This is the first increase since it was introduced in 2013.
Stamp duty on Multiple Dwellings Relief
The calculation of stamp duty under multiple dwellings relief will be abolished. This was used when more than one property was transferred at the same time and sometimes used when a property had an annex or granny flat.
National Insurance
Employees will pay 8% National Insurance rather than 10%. National Insurance is paid by employees earning more than the personal allowance on a pro rata basis, being £242 per week or £1,048 per month. The self-employed will pay 6% Class 4 National Insurance, rather than 8%.
National Living Wage rates
The new rates and ages for employees are as follows:
- Aged under 18 – £6.40 per hour
- Aged 18 to 20 – £8.60 per hour
- Aged 21 and over – £11.44 per hour
- Apprentices aged under 19 – £6.40 per hour
- Apprentices aged over 19, but in their first year of apprenticeship – £6.40 per hour
Personal allowances and bands
- The personal allowance will remain at £12,570
- The higher rate tax band of 40% will be implemented when income reaches £50,271
- The additional rate tax band of 45% will be implemented when income reaches £125,141
The lack of increases in the personal allowances and tax bands has caused the fiscal drag and is the reason so many are paying more income tax due to pay rises etc.
VAT thresholds
The threshold for VAT registration in a 12-month rolling period is increased from £85,000 to £90,000.
The de-registration threshold is increased from £83,000 to £88,000. These calculations are done on a 12-month rolling period and are not reset every year.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues: send your questions through the Contact Us page on our website.
Chantal Baker is the director and founder of Champ Consultants Ltd, an accountancy and tax consultancy practice in Caterham. Please follow them on their various social media channels.
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