Income Tax Allowance + National Insurance + Rate Bands
It is important to note that the tax rates and thresholds are complicated by the fact that the power to vary the tax rates and thresholds of Non-Savings, Non-Dividend income for Scottish taxpayers has been devolved to the Scottish Parliament since April 2017. With the exception of the tax thresholds, similar powers have been passed over to the National Assembly of Wales since April 2019 in respect of Welsh resident taxpayers. The Income Tax Personal Allowance and all other elements of the Income Tax system remain part of the Chancellor’s responsibility. The Scottish and Welsh Budgets have been announced for Tuesday, 19th December 2023.
As was previously announced in the 2022 Autumn Statement, the Personal Tax Allowance currently set at £12,570, will remain at this level until 2028. The Basic Rate Tax Band, presently set at £37,700 will also stay the same until April 2028. Personal allowances will be reduced by £1 for every £2 a person’s income exceeds £100,000.
UK Tax Rates 2024/25 (except Scotland)
|£0 to £12,570||0%|
|£12,571 to £50,270||20%|
|£50,271 to £125,140||40%|
Scottish tax rates 2023/24 re non-savings, non-dividend income
|£0 to £12,570||Personal allowance||0%|
|£12,571 to £14,732||Starter rate||19%|
|£14,733 to ££25,688||Scottish basic rate||20%|
|£25,689 to £43,662||Intermediate rate||21%|
|£43,663 to £125,140||Higher rate||42%|
|Over £125,140||Top rate||47%|
- From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits, including the State Pension.
- The self-employed Class 4 NI rate will be reduced from 9% to 8% from 6th April 2024.
- The employee Class 1 NI rate will be reduced from the present 12% to 10% with effect from 6th January 2024.
|National insurance (NI)||2024/25|
|Class 1 NI employees – earnings between £12,570 – £50,270||10%|
|Class 1 NI employees – earnings in excess of £50,270||2%|
|Class 1 NI employers – earnings in excess of £9,100||13.8%|
|Class 1A Benefits in kind||13.8%|
|Class 1B NI PAYE settlement agreements||13.8%|
|Class 4 NI self-employed – Profits between £12,570 – £50,270||8%|
|Class 4 NI self-employed earnings in excess of £50,270||2%|
|Class 2 NI||Abolished|
|Class 3 voluntary NI*||TBA|
*2022/23 Class 3 NI weekly contributions can be paid up to 5th April 2025 to cover missing state pension years back to 2006.
- As already announced , the zero rate of tax dividend threshold will fall from £1,000 to £500 from 6th April 2024.
- There will be no change to the dividend tax rate.
|Dividend ordinary rate||8.75%||8.75%|
|Dividend upper rate||33.75%||33.75%|
|Dividend additional rate||39.35%||39.35%|
Capital Gains Tax (CGT)
- A reminder that the CGT annual exemption (AE) for individuals, personal representatives (PR) and Trustees is set to fall next tax year.
UK CGT Annual Exemption
|Tax Year||Individuals/PR *||Trustees**|
*Note – the AE is only available to PRs for 2 tax years following the tax year in which the Deceased died.
** Note – the AE is divided equally between the number of Trusts set up by the Settlor (the AE is presently capped at £300 per Trust if 5 or more, or 10 or more if for the benefit of a disabled person).
- There is no change as to how the capital gain above the annual exemption will be taxed. The CGT rate will be dependent upon a combination of the taxpayers status, total income and the type of asset disposed of.
|Status||Residential property||Other Asset|
*If the Trust asset disposed of has been used in the beneficiary’s business, the gain may attract a 10% CGT rate
- The annual pension allowance will remain at £60,000 for 2024/25.
- The money purchase annual allowance will remain at £10,000.
- The minimum Tapered Annual Allowance will remain at £10,000 for individuals who’s adjusted income for the year is £260,000 or more.
- From 6th April 2024, in the event of a pension member dying under the age of 75, any lump sum tax free limit not utilised by the deceased will remain tax free in the hands of qualifying beneficiaries. Any excess above that limit will be taxed at the beneficiaries marginal rate of tax.
- The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275. However those individuals who have protected rights already in place can take a higher tax free amount.
- There are some individuals who save into an occupational pension under the net pay arrangements, but whose taxable income is below the personal allowance, thereby missing out on tax relief relating to those pension contributions.
- With effect from the 2024/25 tax year onwards the intention is to remove this unfairness.
- Shortly after the end of that tax year, HMRC will aim to contact those impacted by this and request their bank account details. Upon receipt they will pay the ‘tax relief’ amount into that account.
State Pension (SP)
- Under the triple lock, SP rises in line with the highest of average earnings, inflation or 2.5% based upon September 2023 figures.
- The highest figure was the average earnings rate for September 2023 of 8.5%,.
- The Government have decided that the SP will increase by 8.5% from April 2024.
Inheritance Tax (IHT)
- As stated within the 2022 Autumn Statement, the 40% IHT rate, the £325,000 IHT Nil Rate Band and the £175,000 Residence Nile Rate Band (RNRB) will remain in place until April 2028.
- The commencement of the tapering off of the RNRB will remain at £2 million.
- At Spring Budget 2023, the government extended the temporary higher rates of three cultural tax reliefs – Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR), Museums & Galleries Exhibition Tax Relief (MGETR).
- Legislation will be introduced to clarify the workings of such tax reliefs.
- The film, TV and video games tax reliefs will be reformed to expenditure credits, following the same approach as the Research and Development Expenditure Credit (RDEC).
- The new Audio-Visual Expenditure Credit (AVEC) will replace the current film, high-end TV, animation and children’s TV tax reliefs.
- The Video Games Expenditure Credit (VGEC) will replace the Video Games Tax Relief (VGTR).
- Film, high-end TV and video games will be eligible for a credit rate of 34% and animation and children’s TV will be eligible for a rate of 39%.
- Companies claiming creative tax reliefs will be required to complete and submit an online information form.
Construction Industry Scheme (CIS)
- From 6th April 2024, subcontractors will have to demonstrate compliance with VAT obligations to be granted and keep gross payment status.
- HMRC will be able to immediately cancel gross payment status to include cases where they have reasonable grounds to suspect fraud involving VAT, Corporation Tax, Income Tax and Pay As You Earn.
Back to work plan
- The aim is to expand the employment support and treatment available and reform the ways that people with disabilities or health conditions interact with the state.
- As part of the Back to Work Plan the government will invest over £1.3 billion during the next five years to help tackle long-term unemployment by establishing an end-to-end process that supports and incentivises unemployed Universal Credit claimants to find work.
- The government is boosting four key programmes – NHS Talking Therapies, Individual Placement and Support, Restart and Universal Support – to benefit up to 1.1 million people over the next five years and help those with mental or physical health conditions stay in or find work.
- The intention is to trial reforms to the fit note process to make it easier and quicker for people to get specialised work and health support, with improved triaging and signposting.
- Stricter benefit sanctions will also be enforced by the Department for Work and Pensions for people who are able to work but refuse to engage with their Jobcentre or take on work offered to them.
- Benefit claimants who continue to refuse to engage with the Jobcentre will face having their claim closed.
- Universal Credit claimants will be asked to take part in work placements requiring them to take a job at the end or risk losing their income.
- Benefit sanctions will be ramped up meaning people who don’t seek employment will lose all support after 6 months – including losing free prescriptions and legal aid.
- Universal Credit benefits will increase by 6.7%.
Off payroll working (IR35)
- The off-payroll working rules (commonly known as IR35) were first introduced in 2000.
- The rules set out that where an individual is working like an employee, they should pay tax like an employee — regardless of whether they are working through their own intermediary (for example, a Personal Services Company).
- HMRC will have the power to set off amounts of tax and National Insurance (NI) contributions already paid by a worker and their intermediary on income from engagements under the IR35 rules against a subsequent PAYE liability settlement with the deemed employer.
- This will apply to income tax and NI liabilities assessed under PAYE on or after 6th April 2024, which arise as a result of an error in operating the off-payroll working rules in respect of deemed direct payments made from 6th April 2017.
Business Rates (England)
- There is a business rates support package worth £4.3 billion over the next 5 years for small businesses and the high street.
- The small business multiplier will be frozen for a fourth consecutive year.
- Retail, hospitality and leisure 75% business rates relief will be extended.
- The corporate tax rates for those companies who do not make profits from oil extraction or oil rights in the UK or UK continental shelf have not presently been changed in respect of the Financial year 2024 (starting 1st April 2024). So at present it is as follows:
Rates for corporation tax years starting 1st April
|Small profits rate (Companies with profits under £50,000)||19%||19%|
|Main rate (Companies with profits over £250,000)||25%||25%|
|Marginal relief fraction (Companies with profits between £50,000 and £250,000)||3/200||3/200|
The taxable turnover threshold for determining whether a person must register for VAT presently remains at £85,000 and the point at which a person can apply to deregister also remain at £83,000 until 31st March 2026.
- As announced in the 2023 Spring Budget, for qualifying expenditure incurred on or after 1st April 2023, companies can claim a 100% first year allowance for main rate expenditure (known as full expensing) and 50% first year allowance for special rate expenditure.
- Full expensing was due to end on 31st March 2026. This sunset clause has now been removed.
Research & Development (R&D) and Patent Box
- The 10% Corporate Patent Box relief in respect of profits arising from a patent you hold or where you have an exclusive licence over it has been left untouched.
- For accounting periods beginning on or after 1st April 2024 there will be the merger of the existing research and development tax relief scheme for small and medium-sized companies (SME) and the research and development expenditure credit (RDEC) used by large companies.
- The SME rules restricting relief where part of the project expenditure has been subsidised have been removed.
- Loss-making companies claiming the existing SMEtax relief will be eligible for a higher payable credit rate of 14.5% if they meet the definition for R&D
- For accounting periods beginning on or after 1st April 2024, the intensity threshold will be reduced from 40% to 30%.
- There will be a one-year grace period that allows a company which fails to meet the intensity threshold, for example due to a one-off shock or small fluctuations in expenditure (for companies close to the threshold), to continue claiming the enhanced support in that year if it met the intensity threshold and successfully claimed enhanced support in the previous year.
Investment Zones and Freeports
- The 5 year Investment Zone programme in England, announced in the Spring 2023 Budget, will be extended to 10 years.
- A similar extension will operate in respect of the Freeports programme.
- Both Investment Zones and Freeports offer tax incentives for businesses setting up within their tax designated areas.
- The UK government will work with their Welsh and Scottish counterparts to offer a similar package within their jurisdictions.
- The next set of investment zones were announced in Greater Manchester, the West Midlands and the East Midlands in England and in Wrexham and Flintshire in Wales.
- Discussions will continue with the various Northern Ireland parties to achieve similar ends.
Plastic Packaging Tax (PPT)
- The rate of PPT will increase from 1st April 2024 from £210.82 per tonne to £217.85 per tonne.
National Minimum Wage (NMW) and National living Wage (NLW)
- A reminder that the NMW and NLW are due to increase from the beginning of April 2024.
|Age Group/Status||2023/24 rate per hour||2024/25 rate per hour|
|Worker 23 years+||£10.42||£11.44|
|Worker 21 -22||£10.18||£11.44|
|Worker 18 – 20||£7.49||£8.60|
|Worker under 18||£5.28||£6.40|
Stamp Duty Land Tax (SDLT) – England & Northern Ireland
- The SDLT residential rates and thresholds will remain as they are until 31st March 2025 inclusive.
- The Devolved Parliaments of Wales and Scotland set their own land transaction tax rates.
England + Northern Ireland SDLT residential rate
|Property/Lease premium/Transfer value*||SDLT rate**|
|Up to £250,000||Zero|
|£250,001 to £925,000||5%|
|£925,001 to £1,500,000||10%|
*First time buyers relief – no SDLT up to £425,000 then 5% between £425,0001 and £625,000.
If property in excess of £625,000 then no relief due..
**Non-UK resident person may have to pay an additional 2% SDLT surcharge
Wales residential Land Transaction Tax (LTT) present rates
|Property (freehold/leasehold) value||LTT rate|
|Up to £225,000||Zero|
|£225,001 to £400,000||6%|
|£400,001 to £750,000||7.5%|
|£750,001 to £1,500,000||10%|
Scotland’s residential Land & Buildings Transaction Tax (LBTT) present rates
|Property purchase value||LBTT rate|
|Up to £145,000*||Zero|
|£145,001 to £250,000||2%|
|£250,001 to £325,000||5%|
|£325,001 to £750,000||10%|
*For first time buyers the zero rate band increases to £175,000
- The SDLT surcharge on acquiring an interest, in excess of £40,000, in a second residential property presently remains at 3%.
Mortgage Guarantee Scheme (MGS)
- The MGS which was due to come to an end in December 2023 has been extended for a further year.
- The MGS, launched in April 2021, involves the government ‘guaranteeing’ 95% mortgages for first time buyers and current homeowners with 5% deposits on homes up to £600,000.
- Under the terms of the scheme, the government guarantees the portion of the mortgage over 80% (so with a 95% mortgage, the remaining 15%).
Tobacco Duty Rates
- The duty rate on all tobacco products will increase by the tobacco duty escalator of 2% above RPIinflation.
- The duty rate for hand-rolling tobacco will rise by an additional 10%, to 12% above RPI
- These changes will apply from 6pm on 22nd November 2023.
Tax Avoidance Scheme Promoters
- These measures are designed to clamp down on the remaining players in the tax avoidance scheme market.
- A new criminal offence will apply to promoters of tax avoidance who fail to comply with a Stop Notice under the Promoters of Tax Avoidance Schemes (POTAS) regime issued in respect of tax avoidance arrangements.
- HMRC will have new powers to apply to the court for a disqualification order against directors of companies involved in promoting tax avoidance, including other individuals who control or exercise influence over a company.
- The maximum prison term for individuals convicted of the most egregious examples of tax fraud will increase from 7 to 14 years.
Post Office Compensation Schemes
- With retrospective effect from 19th April 2021 there will be an exemption from corporation tax on compensation payments from the various schemes.
- Furthermore, any individual who receives the onward payment of compensation will be taxed as though they received the payment directly. The tax impact varies from scheme to scheme.
- From 1st April 2024 Air Passenger Duty rates will rise in line with the Retail Price Index.
- The Aggregates Levy rate will increase to £2.03 per tonne from 1st April 2024.
- The tax reliefs associated with investing in Enterprise Investment Schemes and Venture Capital Trusts due to end in 2025 has been extended until 5th April 2035.
- Landfill tonnage rates will increase from 1st April 2024 – standard rated £103.70 per tonne and lower rated £3.30 per tonne.
- The government has provided £3 million of additional funding this year to the Community Security Trust, an organisation established to protect British Jews from antisemitism and related threats. This funding will be maintained next year.
- The devolved administrations are receiving over £1 billion in additional funding through the Barnett formula over 2023-24 and 2024-25.
- The Scottish Government is receiving £545 million, the Welsh Government £305 million, and the Northern Ireland Executive £185 million.