News

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.