2024/25 Tax Year Changes You Need to Know About

As the end of the 2023/24 tax year approaches, small business owners must prepare for the changes that will come with the advent of the new tax year. Our concise guide will ensure you’re in the know and help you navigate the fundamental changes.

The Key Dates

• The 2023/24 tax year ends on 5th April 2024

• The 2024/25 tax year begins on 6th April 2024

• The new tax year ends on 5th April 2025

Changes for Self-Employed Workers

A reduction in National Insurance Contributions (NICs) will come into force on 6th April. This change will benefit self-employed individuals with profits above £12,750.

Previously, self-employed workers were required to pay Class 2 NICs, but this liability is no longer available. Additionally, the primary rate of Class 4 NICs has been decreased from 9% to 6%, providing further relief for those eligible.

Changes to Dividend Allowance

The tax-free dividend allowance has been cut in half again, affecting individuals receiving any dividend income. As of 6th April, individuals are entitled to only £500 tax-free, down from the previous allowance of £1,000.

Reduction in Capital Gains Tax Exemptions

The annual ‘exempt amount’ for Capital Gains Tax has been permanently fixed at £3,000, a significant drop from the previous figure of £12,300.

Increase in VAT Registration Threshold

The VAT registration threshold has been raised from £85,000 to £90,000 to alleviate an administrative and financial burden on small businesses. This threshold increase means that SMEs with an annual taxable turnover below £90,000 are no longer required to register for VAT.

Minimum Wage Increases

The National Minimum Wage rates will increase this coming tax year, impacting various age groups, including the National Living Wage. For workers aged 21 and over, the National Living Wage will rise to £11.44 per hour, up from £10.42.

Business Rate Alterations

The small business multiplier remains frozen this tax year at 49.9p, offering stability for SMEs’ business rates.

The recently announced extension of the Retail, Hospitality, and Leisure Business Rates Relief Scheme means the scheme will now run until at least 31st March 2025. Eligible properties in these sectors will receive 75% relief on business rates, up to a limit of £110,000 per business.

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Energy Prices Becoming a Burden?

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Sam White