Personal tax – April 2024

Personal tax – April 2024

A number of changes have come into place from April 2024 that could affect your personal tax – an outline of the key changes are below.

The dividend allowance will be cut to £500 on 6 April 2024 from the current allowance of £1,000. This will hit owner managed businesses particularly hard and is expected to raise £455m in additional tax in 2024-25.

The annual exempt allowance for capital gains tax (CGT) is halved to £3,000 from the current £6,000, however there will be a new reduced CGT rate for residential property sales set at 24%, against the usual 28% rate for higher rate taxpayers. The standard 18% rate is unchanged.

The rate of employee national insurance contributions (NICs) has been cut by a further 2% to 8%, the second reduction this year, which combined with the 2% cut announced in the Autumn Statement 2023, is expected to save the average worker on £35,400 over £900 a year.

However, basic rate and higher rate tax thresholds remain frozen until 2028 at £12,570 and £50,271 respectively. This will pull more taxpayers into higher rate tax, with over a million expected to face 40% tax charges for the first time as a result. The additional tax 45% threshold remains unchanged at £125,140.

The income limit for married couples’ allowance increases to £37,000 from the current £34,600.

For those who are self-employed the main rate of Class 4 NICs is cut from 9% to 6% alongside the abolition of the requirement to pay Class 2 NICs which simplifies the tax system.

The high income child benefit charge (HICBC) will increase to £60,000 from the current £50,000.

The charge is tapered so if a parent or their partner, earns between £60,000 and £80,000 it may still be worth claiming.​

There is a 1% charge on child benefit for every £200 of income that exceeds £60,000. If income exceeds £80,000, the charge is equal to the amount of the child benefit payment.

Anyone who has opted out of child benefits due to HICBC can start getting them via the HMRC app or online.

Child benefit will increase from £24 to £25.60 for the eldest child, while the rate for other children rises to £16.95 from £15.90.

On private pensions, the new lump sum allowance is set at £268,275, while the lump sum and death benefit allowance will be £1,073,100. There is no longer a lifetime allowance.

Leave a Comment