With the start of another year, it’s time to think about the tax changes that lie ahead. Instead of skipping ahead to 1 April or 5 April, this year we start with a change to National Insurance Contributions effective from 6 January. Employees will soon benefit from the reduction from 12% to 10%, but this will soon be swallowed up for many of us Scottish taxpayers when the new and increased rates of Income Tax kick in on 6 April (and the complexities of the tax calculations that will follow!).
Contrary to the UK government’s ambition to simplify tax and remove people from the need to complete tax returns, the reduction in the dividend ‘nil rate’ to £500 and the reduction in the annual exemption for Capital Gains Tax to £3,000 is likely to bring many people with relatively modest investment portfolios into the tax return net for 2024/25.
For unincorporated businesses there is the change in the basis of taxation this year to the fiscal year and potentially higher tax bills for the next 5 years as a result. Let’s not forget about Making Tax Digital for Income Tax (MTD for ITSA) still around the corner. Although not mandatory until April 2026 you are invited to volunteer from April 2024, the incentive being to join the new penalty regime currently in force for VAT.
The BIG uncertainty for this year is the general election and the emergency Budget that is likely to follow, with tax changes. Happy New Year!
If you would like to discuss your circumstances, please get in touch with our EQ Tax Experts by calling one of our offices or emailing taxation@eqaccountants.co.uk.