Tax and financial strategies 2024/25

How tax planning can benefit you, and some recent changes.

Daverns have a wealth of experience in advising businesses and individuals in the Berkhamsted area on a range of key tax and financial planning issues. Here we consider strategies to help you to minimise your tax bill, maximise your profitability and boost your wealth.

Fiscal statements

Several significant tax changes were announced in both Autumn Statement 2023 and Spring Budget 2024.

Personal tax

The UK-wide personal allowance was frozen at £12,570 from 6 April 2021. The basic rate band threshold has also been frozen at  £37,700. The personal allowance and thresholds are expected to remain at these levels until April 2028.

There have been no changes to the rates of taxation on non-savings and savings income. The rates of taxation on dividend income for 2023/24 will remain at the increased levels introduced from 2022/23 of 8.75%, 33.75% and 39.35%. The Dividend Allowance has been reduced to £500 for 2024/25.The Savings Allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers (no Savings Allowance is available for additional rate taxpayers).

Scottish taxpayers: income tax rates and bands for non-savings and non-dividend income are different from the rest of the UK. For 2024/25 a new 45% rate will be introduced, making six income tax rates which range between 19% and 48%. Scottish taxpayers are entitled to the same personal allowances as individuals in the rest of the UK and the rates on savings and dividend income are as for the rest of the UK.

Other personal tax changes

  • The High Income Child Benefit Charge (HICBC) threshold has been increased from £50,000 to £60,000 from 6 April 2024. The rate at which HICBC is charged is halved so that Child Benefit is not fully withdrawn until individuals have an ‘adjusted net income’ of £80,000 or higher.
  • The Furnished Holiday Lettings (FHL) tax regime, which gives certain tax benefits to individuals letting a property as a short term holiday rental, will be abolished from 6 April 2025.

National Insurance contributions

The main rate of Class 1 employee National Insurance Contributions (NICs) was cut from 12% to 10% from 6 January 2024. A further cut to 8% was made from 6 April 2024.

The main rate of Class 4 NICs payable by self-employed individuals was also reduced from 9% to 6% from 6 April 2024.

In addition, the need to pay Class 2 NICs was removed from 6 April 2024 for self-employed individuals with profits above £6,725; individuals will continue to get access to contributory benefits. It remains possible for those with profits below £6,725 to voluntarily pay Class 2 NICs in order to access contributory benefits.

The thresholds for Class 1 NICs and Class 4 NICs remain at 2023/24 levels.

Corporation tax

The main rate of corporation tax remains 25% where profits for an accounting period exceed £250,000. If a company has no associated company in the accounting period and its profits do not exceed £50,000, the small profits rate will be 19%. If a company has no associated company in the accounting period and its profits are between £50,001 and £250,000, a marginal rate will apply.

If a company has one or more associated companies in the accounting period then the limits are divided by the number of associated companies plus one. For an accounting period of less than 12 months the lower limit and the upper limit are proportionately reduced. There are a number of complex rules regarding associated companies.

Other changes

  • From 6 April 2024, the higher rate of Capital Gains Tax for residential property disposals reduced from 28% to 24%. The lower rate remains 18% and Private Residence Relief continues to apply.
  • Multiple Dwellings Relief, which provides relief from Stamp Duty Land Tax for bulk purchases in England and Northern Ireland, will be abolished from 1 June 2024.
  • The VAT registration threshold increased from £85,000 to £90,000 from 1 April 2024. The deregistration threshold also increased from £83,000 to £88,000.
  • Additional support will be given to creative industries through credits and reductions in business rates.
  • The alcohol duty freeze will be extended until February 2025.
  • The temporary 5p cut in fuel duty rates will be extended until March 2025 and the planned inflation increase for 2024/25 has not taken place.
  • A new duty on vaping products will be introduced from 1 October 2026. The government will also introduce a one-off tobacco duty increase from the same date.

Your financial planning strategy

In the face of ongoing change, it is more important than ever to have a robust business and personal financial planning strategy in place, to help ensure that you and your family are financially secure and on course to achieve your long-term goals.

If you're in the Berkhamsted area and would like advice on tax planning strategies, please contact Daverns.