The new tax year is here, and with it comes a refreshed set of rules and figures to keep in mind.
Whether you’re an employer or an employee, it is important that you are aware of the latest changes. Staying on top of the latest tax regulations can save you time, money, and a lot of stress.
Here’s a breakdown of some key information for the 2024/2025 tax year:
Income Tax
- Personal Allowance: The personal allowance remains unchanged for the 2024/2025 tax year at £12,570. This means that the first chunk of your income is tax-free (you only pay 20% tax on what you earn above this amount).
- Income Tax Bands: The income tax bands are also staying the same this year. You’ll pay 20% income tax on earnings between £12,571 and £50,270, 40% on earnings from £50,271 to £125,139, and 45% on anything above £125,140.
(Please note, these are the rates in England, Wales & Northern Ireland. Scotland have different rates and thresholds)
National Insurance
- Rates: Class 1 National Insurance contributions (NICs) have been significantly reduced this year. From 6th April 2024, employees will pay 8% rather than the previous 10% (It had been cut from 12% in January 2024). Class 4 NICs (self employed people), will also enjoy a 3% cut (from 9% to 6%).
- Class 2 NIC is no longer payable by self employed people if your profits are above £6,396.00 per year. You can pay Class 2 NIC’s voluntarily if your profits are below this threshold.
Dividend Tax
- Allowances: the tax free dividend allowance has been reduced to £500 from 6th April 2024 (previously it had been £1000).
- Rates: the dividend tax rates remain the same as the previous tax year – basic rate is 8.75%, high rate is 33.75% and additional rate is 39.35%
Capital Gains Tax
- Reduced Allowances: Be aware that the capital gains tax-free allowance has been halved this year. Individuals can now claim up to £3,000 of tax-free capital gains.
- Tax Rates: The basic rate for capital gains tax remains at 10%, while higher and additional rate taxpayers will pay 20%. The rate for trusts and estates stays at 20%, with the surcharge on residential property and carried interest holding at 8%. However, the higher rate on residential property gains has been reduced from 28% to 24%.
Important Dates
- Tax Year End: April 5th, 2025, will mark the official end of the 2024/2025 tax year.
- Tax Filing Deadlines: The standard online filing deadline for tax returns and tax payments for the 2023/24 tax year, including the first payment on account, is January 31st, 2025. Paper return filers have until October 31st, 2024.
It’s always best to consult with an accountant to received personalised information that is applicable for your business and situation. You may be eligible for more tax saving schemes, relief or other government payments.
Turas Accountants are your partners in ensuring a smooth financial journey throughout the year. We deliver a comprehensive suite of accounting services tailored to address the varied demands of your business. From navigating payroll intricacies to exploring the dynamic world of cryptocurrency, our experienced team is on hand to provide support.
Find out more about what we have to offer your business here.