In the age of tighter margin, Scottish GP practices should make sure they are reviewing the partner current accounts regularly and project into the future to ensure they remain positive. This will be even more crucial with the basis period changes for tax as well as the normal retirement and changes in partners.
Going forward, there a myriad of tax changes coming into force. There are some winners and losers however the majority will be, at least slightly, better off.
Income tax rates are a devolved issue however there are changes the UK government can make so firstly the UK changes are as follows:
- The threshold for additional tax rate has been reduced from £150,000 to £125,140 from 6th April 2024
- The dividend allowance is further reduced to £500 in 2024/25 (£1,000 in 23/24)
- The capital gains tax exemption is also reducing to £3,000 in 2024/25 (£6,000 in 23/24)
The biggest changes are coming from the Scottish budget which are summarised below:
- The additional tax rate has been increased to 48% from 6th April 2024 (compared with 45% in rest of UK).
- There is a new tax rate called the advanced tax rate of 45% which will cover income between £75,000 and £100,000
- The higher rate will increase 1% to 42% (the rest of the UK is 40%)
And there are a couple of key wins to soften the blow:
- Class 2 NIC will be abolished for most from 2024/24. This only saves £179 but every little helps!
- More recently the movement of the thresholds for high income child benefit charge meaning more can claim.
- Class 4 NIC will be further reduced to 6%
The main wins are in relation to pensions. The annual allowance has been increased to £60,000 from 6th April 2023. This means that on a rolling 4-year basis £240,000 can be contributed.
Ending on a positive note, perhaps the biggest win is the abolition of the lifetime allowance. With GPs being one of the main groups affected, those retiring can now look forward to their full pension ‘pot’ without any dilution for those over £1,073,100.
More information of this coming soon. Contact us if you’d like to chat with an expert.