Pensions:
From 2024/25, the following key points apply:
- Annual Allowance remains at £60,000.
- Money Purchase Annual Allowance remains at £10,000 with no carry forward.
- The Life Time allowance has been abolished but this has increased complexity – this only affects you if you have over £1,000,000
- Lump Sum Allowance (LSA) of £268,275 – covers tax-free cash.
- Lump Sum and Death Benefit Allowance (LSDBA) of £1,073,100 – covers the totality of lifetime tax-free cash, severe ill-health lump sums and tax-free death benefit lump sums on death under age 75.
- Excess amounts over the LSA and LSDBA are taxed as income.
- Separate Overseas Transfer Allowance of £1,073,100, with a 25% overseas transfer charge applying to the excess in situations where this charge isn’t triggered in its own right.
- A range of transitional protections are in place. Annual Allowance – No changes were announced to the various Annual Allowances for 2024/25. For the Tapered Annual Allowance, the Threshold Income limit remains £200,000, the Adjusted Income limit remains £260,000 and the minimum allowance remains £10,000.
ISA’s:
As previously announced, the Government will reform the Individual Savings Accounts rules with effect from April 2024, including:
- Permitting multiple subscriptions to ISAs of the same type every year.
- Permitting partial transfers of ISA funds in-year between providers.
- Removing the requirement to reapply for an existing dormant ISA.
- Making technical changes to the rules for the permitted investments.
- UK ISA consultation The Government has now announced a consultation on a new UK ISA, with an additional £5,000 subscription limit in addition to the existing £20,000 allowance. The consultation closes on 6th June 2024.
Taxation:
National Insurance:
With effect from 6th April 2024,
- The main rate of employee Class 1 National Insurance Contributions (NICs) payable on earnings between £12,570 and £50,270 reduces from 10% to 8%.
- This follows the previous reduction from 12% to 10% with effect from 6th January 2024.
- There are also changes for self-employed people, with effect from 6th April 2024:
- The main rate of Class 4 NICs now reduces from 9% to 6% for those with profits between £12,570 and £50,270 in 2024/25 (it was previously announced that the reduction would be from 9% to 8%).
- As previously announced, the requirement to pay Class 2 NICs ends for most self-employed people – State Pension entitlement will be linked to Class 4 NICs.
- Self-employed people with profits between £6,725 and £12,570 will continue to get NI credits to build State Pension entitlement.
- Self-employed people with profits below £6,725 can continue to pay voluntary Class 2 NICs at the current rate of £3.45 per week in 2024/25 to build State Pension entitlement.
Capital Gains Tax:
With effect from 6th April 2024,
- The higher rate of Capital Gains Tax (CGT) for residential property disposals not qualifying for Private Residence Relief will be cut from 28% to 24%.
- The lower rate will remain at 18% for any gains that fall within an individual’s Basic Rate Band.
- As previously announced, with effect from 6th April 2024 the CGT Annual Exempt Amount reduces from £6,000 to £3,000.
Big change for families with young kids:
High Income Child Benefit Charge – The income threshold at which the High Income Child Benefit Charge (HICBC) starts to be charged will increase from £50,000 to £60,000 from 6th April 2024. In addition, the rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earned above the threshold, to 1% for every £200. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher. The Government plans to administer the HICBC on a household rather than an individual basis by April 2026, and will consult on this in due course
Other areas of Note:
VAT:
The threshold for VAT registration has been increased to £90,000 from £85,000.
Income Tax:
No changes in bandings here until 2028, creating an ‘inflation tax’ on earnings going forward until 2028.
If you are able to use the marriage allowance and did not think is was worthwhile. You will now be able to backdate to 2019/20, but you will need to get your skates on as you only have until 5th April 2024.
Non-domiciles:
The Government has announced it will abolish the current tax regime for non-UK domiciled individuals (non-doms) from 2025/26.
Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the last 10 years. This new regime will commence on 6th April 2025 and applies UK-wide.
The following transitional arrangements will be introduced for existing non-doms claiming the remittance basis: An option to rebase the value of capital assets to 5th April 2019. A temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025/26). • A two-year Temporary Repatriation Facility to bring previously accrued foreign income and gains into the UK at a 12% rate of tax.
Scottish taxpayers who pay higher rates of income tax than in the rest of the UK can also benefit from higher rates of tax relief on member pension contributions.
Other areas of note
The Chancellor has made a few changes to reduce the level of tax for working people. However, to balance the books he has changed the ‘Furnished Holiday Lettings tax regime’ and ‘Multiple Dwellings Relief’ and added a new duty to vaping and increased tobacco duty. Natwest: The Government has previously pledged to launch a retail share offer for NatWest, giving ordinary investors a chance to buy a chunk of the bank, which remains partially under state ownership. The Chancellor signalled this could happen in the summer ‘at the earliest’, declining to set a clear timetable for the sale.