Just in case you missed or need reminding of the upcoming financial changes happening this month, here’s a summary of the key developments for people and businesses…
Individuals
National Insurance: The lower earnings limit, which is the minimum amount you need to earn to qualify for certain state benefits including the state pension, will rise from £6,500 to £6,708.
Child Tax Credit: The cap that limits households receiving Universal Credit or Child Tax Credit from getting further payments for a third or subsequent child will be removed.
State Pension: As part of the ‘triple lock,’ basic and New State Pension payments will rise by 4.8% to up to £230.25 per week, which is above the current rate of inflation.
Parental leave: Parental leave and paternity leave can both be taken from day one of employment. Before, one year’s service was needed to qualify. Employees can also take paternity leave after shared parental leave. However, there will be no change to the eligibility requirements for paternity leave pay. Leave will still be unpaid if the employee does not have 26 weeks’ service.
Cars: Purchasing new petrol and diesel motors with high carbon dioxide emissions will incur significantly more first-year road tax, with the most polluting vehicles now attracting a charge of up to £5,690, when first registered. EVs will move into the standard VED system, meaning drivers will pay the standard annual rate of £200 for the first time, rising with inflation thereafter.
Personal tax: The personal allowance (£12,570) and personal tax thresholds will be frozen until 2030/31. Although this doesn’t represent a direct change, inflation will mean ‘stealth tax’ will drag more people into higher bands, which will in turn affect their personal savings allowance, Capital Gains Tax rate, and their dividend tax rate.
Businesses
Making Tax Digital for Income Tax: MTD for ITSA comes into effect, but there will be a ‘soft landing’ and there will therefore be no penalties for late submissions of the quarterly returns for the first year.
Dividends: Tax on dividends will increase by 2% for basic and higher rate taxpayers. The additional rate will remain unchanged. Basic rate is rising from 8.75% to 10.75%. Higher rate is rising from 33.75% to 35.75%.
Minimum wage: The National Living Wage for those aged 21 and over will rise from £12.21 to £12.71 per hour. Those aged 18 to 20 will see an increase from £10 to £10.85. The under 18s and the apprentice rate increase from £7.55 to £8.00.
Statutory sick pay: As well as the removal of the lower earnings limit, statutory sick pay will increase from £118.75 to £123.25 per week. Statutory family leave payments will also rise from £187.18 to £194.32 per week for periods where the minimum cap applies.
First year allowance: For businesses, there will a new 40% first-year allowance for qualifying capital expenditure that is not covered by full expensing or the Annual Investment Allowance. There will be a reduction in the main writing down allowance rate from 18% to 14%.
APR & BPR: The level of the threshold for 100% Agricultural and Business Property Relief will be increased from £1 million to £2.5 million, with 50% relief (20% effective rate of tax) continuing to apply to qualifying assets above that level. Spouses or civil partners can now pass on any unused allowance, meaning a surviving partner’s threshold could be a maximum of £5 million before paying Inheritance Tax.
Capital Gains Tax: Business Asset Disposal Relief rate rises from 14% to 18%.
Business reliefs: Supporting small business relief replaces retail, hospitality and leisure relief.
Working from home: Claiming the flat-rate tax relief of £6 per week for home working will no longer be possible, unless reimbursed by your employer.
Need some guidance?
If you require any guidance as a result of any of the changes listed above, please get in touch with us. A member of our team will be happy to assist you…
