Tax Changes For Tax Year 2024/25
There are a few significant changes which the government has previously announced to tax rates etc, which are due to take effect at the start of the 2024/25. The principal changes are:
a) Reduction in the capital gains tax exempt band to £3,000. This represents a reduction of approximately 75% from the exempt band which existed in tax year 2022/23.
b) A reduction in the dividend income exempt rate band to £500. Again this represents a reduction of about 75% in the band for exempt dividend income which existed in tax year 2022/23.
c) The pensions lifetime allowance is to be abloished. Previously an additional income tax charge would arise where the value of an individuals pension exceeded the limit.
d) Class 4 NIC rate for the self employed is being reduced to 8% from 9%. In addition, for most self-employed, class 2 NIC is no longer payable.
e) Tax year basis replaces current year basis for the self employed. This means that for the self employed, all self-employed income is taxed in the year that it is earned. Previously self employed income was taxed based on the income shown in accounting periods ending in a tax year.
The above changes do not include any additional tax changes which weill arise as a result of the March 2024 budget.