What's in store for the new tax year?

29 April 2024

The new tax year started over 3 weeks ago with several important changes coming into effect. Here's a reminder of what has changed:

Dividend Allowance Reduction: The dividend allowance has been cut from £1,000 to £500.
Halved Capital Gains Tax Exemption: The annual exempt allowance for capital gains tax (CGT) has been halved from £6,000 to £3,000. Just two years ago, it was at £12,300, marking a significant decrease.
New CGT Rate for Property Sales: A reduced CGT rate of 24% will now apply to residential property sales, down from the usual 28% for higher-rate taxpayers. The standard 18% rate remains unchanged.
Lower Employee National Insurance Contributions (NICs): Employee NICs have been reduced by 2% to 8%, marking the second reduction since January. This will save the average worker earning £35,400 over £900 annually.
Frozen Tax Thresholds: Basic rate and higher rate tax thresholds remain frozen until 2028 at £12,570 and £50,271 respectively. This freeze is expected to push over a million taxpayers into the higher rate tax band, with no changes to the additional 45% threshold at £125,140.
Lower Self-employed Class 4 NICs: The main rate of Class 4 NIC has been reduced to 6% from 9%, along with the discontinuation of the need to pay Class 2 NICs.
Increased High Income Child Benefit Charge (HICBC): The threshold has been raised to £60,000 from £50,000, with a tapered charge for incomes between £60,000 and £80,000. Child benefit rates have also increased so the eldest child now receives £25.60 a week, all other children receive £16.95 each a week.
State Pension and Working Tax Credit Adjustments: The state pension increased to £221.20 a week, and the basic element of working tax credit rose from £2,280 to £2,435.
Changes to Private Pensions: New lump sum and death benefit allowances have been introduced, with the removal of the lifetime allowance.
Rise in ATED Charges: The annual tax on enveloped dwellings (ATED) has seen a 6.7% increase from April 1, 2024, in line with the September 2023 CPI

Homebuyers in Stamp Duty Sprint Before April Hike

by PH186232 • 20 February 2025

With the 1st April deadline looming, its reported that 550,000 homebuyers are racing to complete purchases before stamp duty jumps back to its 2022 levels. We have read that sales awaiting completion are up 25% from last year, with an average five-month wait putting pressure on buyers to beat the deadline. Currently, first-time buyers pay no stamp duty on homes up to £425,000 when purchasing a property worth up to £625,000, but from 1 st April, that drops to £300,000. The upper limit will also fall from £625,000 to £500,000. It's not just the first-time buyers taking a hit, currently stamp duty is only owed on amounts over £250,000, however from 1 st April, only the first £125,000 will be exempt. Despite the cost increase, it looks like most buyers are still pressing ahead, with some even renegotiating offers to offset the hike. According to our research, regardless of the impending cost increases, property experts such as Rightmove are predicting the demand to stay strong; especially if interest rates continue to fall. With mortgage rates already dipping below 4%, we believe buyers remain hopeful for a more affordable market ahead.