Tax and contracting News
08 - 04 - 2024
06 April 2024 was the first day of the 2024/25 tax year which
runs until 05 April 2025.
Whilst the PAYE and National Insurance thresholds remain the same in England and Wales there are some other significant changes for taxpayers.
For employers (and employees):
Employee’s National Insurance – Reduced from 10% to
8% for earnings between the primary threshold (£12,570pa) and the upper earning
limit (£50,270pa).
National Living Wage – Increased to 11.44 per hour
for workers aged 21 and over from 01 April 2024. For workers aged 18-20 the new
rate is £8.60 and school leavers under 18 it is £6.40.
Statutory Payments – The weekly rate of Statutory
Sick Pay has risen to £116.75. Statutory parental pay has risen to £184.03 (or
90% of the employee’s average weekly earnings if lower).
Investment Zones - Employers should also update their payroll software for the new National Insurance rates applicable to (National Insurance Letters D, E, K and N), meaning that eligible employers with business premises in an Investment Zone tax site will be able to apply a zero rate of Secondary Class 1 National Insurance contributions on the earnings of eligible new employees who are expected to send 60% or more of their time in the tax side. This applies to earnings up to £25,000 per year, for 36 months per employee. Other tax reliefs are also potentially available to businesses with premises in investment zone tax sites.
For the Self Employed:
Class 2 National Insurance – No longer required for 2024/25, although it will still be possible to make Class 2 contributions voluntarily. Self employed taxpayers with profits over £12,570 will still gain in a qualifying year for state pension and contributory benefits. Self employed taxpayers with profits between £6,725 and £12,570 for 2024/25 will receive a National Insurance credit entitling them to contributory benefits.
Class 4 National Insurance – Reduced to 6% for profits between £12,5770 and £50,270.
Basis Period Reform – From 06 April 2024 trading profits will be assessed on a ‘tax year basis’, regardless of the usual accounting period for the business. The 2023/24 tax year is a transitional year.
Other Changes for 2024/25
Scottish Income Tax Rates – From 06.04.2024 a new Advanced income tax band is introduced to apply a 45% rate on annual income between £75,000 and £125,140. The Top rate of tax will be 48%.
Dividend Tax – The Dividend Tax Allowance is reduced
from £1,000 to £500.
Capital Gains Tax – The Capital Gains tax free
allowance is reduced from £6,000 to £3,000.
High Income Child Benefit Tax Charge - From 06 April 2024 the threshold at which the tax charge applies has increased from £50,000 to £60,000. The rate of the charge has also been reduced meaning that the full amount of Child Benefit is not reclaimed until the individual's income reaches £80,000. The tax charge is applied when one taxpayer in the household earns over the relevant threshold.
If you would like further information on how any of the
above affects you please do not hesitate to get in touch on contactus@foremansllp.com or 01244
625 500. Our current client can contact their personal Advisor who will be
happy to help or investigate further.
The above information is intended to be a summary of some
of the most significant tax changes for 2024/25 as at 06.04.2024. It is not
intended to be a comprehensive list of all of the 2024/25 tax changes. If you require further information or clarification please contact Foremans LLP.
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WEEKLY INCOME INFORMATION
Income For A Week
Pre Tax Income
Choose the Industry Sector that you work in. Use the drop down menu in the usual way.
The VAT Flat Rate Applied -
-
RESULTS TABLES
COMPARISON TABLE FOR NET INCOME
RELATIVE INCOME BY STRUCTURE
Weekly by :-
Annually by :-
Weekly by :-
Annually by :-
Fixed Data
PAYE
Statutory rates
CIS
Corporation tax
National insurance
UMBRELLA COMPANY
AGENCY INFORMATION
Assumptions
General
- The user is over 21 and subject to tax in the UK
- The user wishes to minimise their tax liability
- The user is subject to national insurance i.e.he/she is not over retirement age
- Only current tax rates and limits are applied
- No tax mitigation payments are made e.g. pension contributions
- Only 3 digit letter 'L' tax codes shown in the drop down list can be entered
- The user does not have a turnover greater than £100,000 where fewer reliefs and or higher taxes may apply
Expenses
- All miles claimed as expenses are for business use using a personally owned car or van
- All other expenses claimed are wholly, necessarily and where appropriate exclusively for the benefit of the business
Foremans LLP Charges
- Foremans fees associated with Limited Company, Sole Trader or Umbrella are as per published rates
- Foremans current Service Costs are allowed for in all calculations.
Holiday Pay
- Holiday pay is accumulated week by week by Umbrella or Agency employer but paid out during the year
VAT
- Limited Company or Sole Trader will be VAT registered
- Limited Company or Sole Trader will take advantage of Flat rate VAT
- Flat rate applied includes the benefit of the additional 1% applicable to the first year of VAT registration
Limited Company Conditions
- One director / one shareholder in a Personal Service Company
- Director of Personal Service Company elects to vote for 100% dividend after salary, costs and expenses
- Director's salary is maximum salary to the primary threshold for NI
- The Limited Company is trading normally i.e it is not subject to IR35 and is not a Managed Service Company
NOTES
- The Current tax rates are taken from the Fixed Data Table
- The current Value Added Tax Rate is 20% and is applied to all invoices and expenses as appropriate
- The Director's Salary is fixed in relation to National Insurance thresholds. Higher Rate Taxpayers should consider the advantages and disadvantages of a larger annual salary or bonus
- Higher Rate Taxpayers may wish to consider the advantages and disadvantages of shared ownership of their business
- Users with a tax code other than three digits and letter "L" may telephone or email our Development Department to request a detailed calculation
- Generally the use of an Umbrella rather than an Agency payroll is only efficient if sufficient weekly expenses are allowable and claimed
- The expenses claimed under an Umbrella should not prevent the proper operation of National Minimum Wage
Dave Wilde, Foremans (UK) Limited
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