Tax changes – What’s new in 2024?

We are now well and truly into 2024 and before you know it the end of the 2023/24 tax year on 5 April will be upon us.

We’ve highlighted some changes which you need to be aware of in previous articles – these include the National Insurance cut which came into effect on 6 January and the changes to the national living and minimum wages which are effective from 1 April.

In this article we are reminding you a of a few more key tax changes which might affect you or your business this year.

 

Business taxes

Corporation tax

On 1 April 2023, the main rate of corporation tax increased from 19% to 25% and for businesses with accounting periods which straddling 1 April, profits are time apportioned.

Businesses with profits of less than £50,000 continue to be taxed at 19%, and for businesses, with profits of between £50,000 and £250,000 a tapered rate applies.

Companies with a March 2024 year end onwards will face exposure to a full 25% tax rate, if they have profits of more than £50,000.

These companies will want to consider cash flow and to expect a higher tax liability even if their profits have not increased.

 

Merging Research and Development Expenditure Credit (RDEC) and SME schemes

The RDEC and SME schemes will be merged into a new RDEC-style scheme. This new scheme will apply for accounting periods starting on or after 1 April 2024, meaning that the first annual period to be affected will be those ending March 2025 onwards.

 

Personal taxes

Capital gains tax (CGT) annual exempt amount halved

If you own investments outside an ISA which you plan to sell, you will need to be aware of upcoming cuts to CGT allowance. Examples include a second home or other valuable assets.

Currently, you can make gains of up to £6,000 before paying any tax (down from £12,300 in the 2022/23 tax year).

From April 2024, the CGT allowance will be reduced again to just £3,000.

 

Dividend allowance halved

From 6 April 2024 the dividend allowance will reduce from £1,000 to £500. The tax rates on dividends over the allowance are not changing and depend on what tax band you fall into.

 

ISA limits frozen

The limits on ISAs and Child Trust Funds will be frozen for 2024/25.

However, from April 2024 there will be more flexibility – multiple subscriptions to ISAs of the same type every year will be allowed and it will be possible make partial transfers of ISA funds between providers.

What you need to do will depend on the size of your business, whether it is R&D intensive or not and if the business is profitable.

It’s best to talk to us if you need advice in this area.

 

Changes to business rates in England

The small business multiplier will be frozen from 1 April 2024 and the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. The standard multiplier will be increased from 51.2p to 54.6p.

 

Looking ahead

We have the budget to look forward to in just one month’s time on 6 March and we could see further tax changes announced then.

The media are frantically speculating about income tax cuts and even the abolition of inheritance tax! Looking even further ahead, we are facing a general election in the last quarter of this year and potentially a new government. Labour has yet to set out its election manifesto.

We will watch carefully as things unfold and bring you all the information you need to know.

As always though, if you need our help or advice get in touch at hello@chw-accounting.co.uk


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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