With the start of the new tax year from 6 April 2024, taxpayers can expect significant changes that will directly impact their finances.

If you have not already, it is time to closely examine your financial planning, including savings, investments, and tax compliance.

So, what changes should you be aware of from 6 April 2024?

  • Employee NICs: Primary Class 1 NICs for employees will be reduced from 10% to 8%, aligning with the Government’s efforts to lower the tax burden and simplify the tax code.
  • Self-employed NICs: Class 4 NICs for the self-employed will drop from 9% to 6%, alongside the abolition of Class 2 NICs for those with profits over £12,570, simplifying tax responsibilities and maintaining access to contributory benefits.
  • Capital Gains Tax (CGT): From April 2024, the CGT higher rate on the sale of second and additional homes drops from 28% to 24%. This move means you might need to reassess your property investment and disposal strategies.
  • Stamp Duty Land Tax (SDLT): The Government is scrapping Multiple Dwellings Relief starting 1 June 2024. If you are buying multiple properties in one go, you may need to rethink your strategy.
  • VAT registration threshold: Rising from £85,000 to £90,000 in April 2024, the new threshold offers a slight reprieve for small businesses. It is crucial to understand when you must now register for VAT.

Consulting with your accountant is the best way to navigate these changes effectively.

What do these changes mean for you?

For the self-employed, the significant decrease in Class 4 NICs coupled with the abolition of Class 2 NICs on profits over £12,570 will practically reduce your overall tax liability and allow for a better allocation of funds towards business growth, savings, or personal investment.

There are some intricacies around the  abolition of Class 2 NICs for those with profits below £6,725. The option of paying voluntary Class 2 NICs after 6 April 2024 in order to build their entitlement to the State pension and other contributory benefits will remain.

For higher-rate taxpayers dealing with the sale of second and additional homes, the decrease in the CGT rate from 28% to 24% offers a more favourable tax environment for disposing of residential properties.

This change suggests a window of opportunity for tax-efficient disposals and requires a review of your timing and strategy to maximise benefits.

The abolition of Multiple Dwellings Relief in June 2024 requires a strategic shift for those investing in property.

With this relief gone, it becomes more costly to acquire multiple properties in a single transaction and you will need to explore alternative tax-efficient investment strategies. Perhaps by focusing on sectors or assets not affected by this change such as commercial properties or investments that qualify for other forms of tax relief.

The Government is also promoting tax reliefs for investments in digital and green technologies, aiming to foster innovation and environmentally sustainable business practices.

These incentives, like Enhanced Capital Allowances, could offer considerable savings and should encourage investment in qualifying technology and green energy projects, including solar panels, wind turbines, and energy-efficient equipment.

The VAT registration threshold increase to £90,000 has the potential to significantly benefit SMEs, likely delaying the VAT registration requirement for many.

This change could positively affect your cash flow and simplify compliance efforts in the short term.  To fully understand the impact, you must review your business’ current and projected turnover, ensuring you remain compliant with VAT registration requirements at the new threshold.

Having said this, it is sometimes worth registering for VAT early to simplify your pricing structure and have access to the Flat Rate Scheme which gives you clear visibility of your VAT liabilities.

Looking ahead, the reform targeting non-UK domiciled individuals, transitioning to a residence-based tax system from April 2025, brings increased responsibility for those affected.

If you are a non-domicile residing in the UK for over four years, you will face heightened tax obligations on your global income and gains.

This tax year might be an opportune moment to carefully review your residency status and potentially restructure your financial affairs to mitigate the impact of these changes.

With taxes undergoing considerable changes in the 2024/25 tax year, it is going to be crucial to actively review and adapt your financial and tax planning strategies.

Engaging with a tax professional is the best way to receive customised advice that helps you navigate the complexities of the tax system effectively, ensuring you leverage every available relief and adjustment to optimise your financial position.

If you require further information on your new tax liabilities, please contact one of our team

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