Is your business prepared for the new tax year?
As we enter the new tax year of 2024/2025 in the UK, small business owners should be aware of key changes and updates that may impact their businesses. It is important to stay informed and prepared for the evolving tax laws.
In this article, we will be discussing the key points of what you need to know.
When does the new tax year run?
The 2023/24 tax year ended on 5th April 2024. The 2024/25 tax year is now running from the 6th of April 2024 to the 5th of April 2025.
What changes will affect my small business in the 2024/25 tax year?
Recent government analysis has shown that individuals are paying more tax than ever in the last decade. HMRC collected £430.3 billion in Income Tax Receipts in 2024, which is £23.2 billion higher than the same period last year.
This is why making the most out of your tax contributions can boost your finances. Changes in the 2024/25 tax year that could affect your business include:
National Insurance Adjustments: NIC for self-employed
Self-employed individuals earning over £12,750 will experience a reduction in National Insurance contributions (NICs). The obligation to pay Class 2 NICs for the self-employed has been eliminated. Following the announcement in the Spring Budget on Wednesday, 6th March 2024, the primary rate of Class 4 NICs has been reduced from 9% to 6%.
Tax Allowance Adjustments: Dividend Allowance and Capital Gains Tax
The tax-free dividend allowance has been halved again, from £1,000 to £500 as of April 6, 2024.
The Capital Gains Tax annual exempt amount has been permanently set at £3,000 for individuals starting in 2024, down from £6,000 in 2023.
VAT and Business Rates: Threshold and Rates
The VAT registration threshold has been raised from £85,000 to £90,000 to ease the VAT-related burdens on small businesses.
The small business multiplier will remain at 49.9p, and the Retail, Hospitality, and Leisure Business Rates Relief scheme will extend until March 31, 2025, providing eligible properties with 75% relief up to £110,000.
Wage and Pension updates: National Minimum Wage and Pension Lifetime Allowance
Effective April 1, 2024, the National Living Wage for individuals aged 21 and over will rise to £11.44 per hour, a 9.8% increase.
The Pension Lifetime Allowance will be abolished from 6th April, with changes in the taxation of lump sum benefits.
Investment and R&D (Research and Development) incentives: SA Limits and R&D
ISA limits will remain frozen in 2024/25, allowing individuals to invest up to £20,000 without paying tax.
The Research and Development Expenditure Credit scheme will merge with SME schemes from 1st April.
You can see the full list of upcoming changes from the Spring Budget here.
I still have questions and can’t seem to get through HMRC’s helpline, who else could I contact about this?
April is indeed an extremely busy time for the HMRC helpline. The number of calls made to this line is 12.8% higher than the monthly average at this time of the year. This creates an overall 25% longer waiting time, which can feel like a lifetime when having queries.
At CloudAccountant.co.uk, we might be able to help you quicker. Our friendly experienced team can make complex information easy to understand.
How CloudAccountant.co.uk can help you:
If you have any questions about how the new tax year might affect your finances as a business owner or sole trader or would like to know more about how we can customise an accountancy solution to your needs, you can contact us by emailing
info@cloudaccountant.co.uk, call us on 01625 546 232, or simply fill in the enquiry form here.