The UK government announced new tax rates and allowances for the 2023/2024 tax year, which will affect individuals and businesses across the country.
The new tax rates and allowances came into effect on April 6th, 2023, and will apply to income earned during the 2023/2024 tax year.
National Insurance Contributions Rates From April 2023, employees will continue to pay Class 1 National Insurance contributions on their earnings. The Class 1 National Insurance contribution rates will be as follows:
- 12% of your weekly earnings between £242 and £967
- 2% of your weekly earnings above £967
For employers, the rate of Class 1 National Insurance contributions will be 13.8% on earnings above the secondary threshold.
Income Tax Bands and AllowancesThe income tax personal allowance has been frozen at £12,570 until April 2028. The basic rate band will remain at £37,700, which means that individuals will pay 20% tax on the next £37,700 of income.
The higher rate income tax band will start at £50,271 per year and end at £125,140 per year, with a tax rate of 40%. The Personal Allowance tapers away at a rate of £1 for every £2 of income over £100,000, down to zero for income of £125,140 or above. The additional rate tax band drops to £125,140 from this tax year, with the tax rate remaining at 45%.
New Lower Dividend AllowanceThe government has also announced a new lower dividend allowance of £1,000 for the 2023/2024 tax year, which means that individuals will pay tax on any dividend income over £1,000. The tax rates for dividend income will be as follows:
- 8.75% on dividend income within the basic rate band
- 33.75% on dividend income within the higher rate band
- 39.35% on dividend income within the additional rate band
New Capital Gains Tax AllowanceThe Capital Gains Tax allowance reduces to £6,000 for the 2023/2024 tax year. This means that individuals will be able to make a capital gain of up to £6,000 without paying any Capital Gains Tax. For gains above this amount, the rates (in the absence of any other reliefs) will be as follows:
- 18% on gains on residential property, and 10% on any other gains, to the extent these fall within the individual’s basic rate income tax band; and above this.
- 28% on gains on residential property, and 20% on any other gains.
The new tax rates and allowances for the 2023/2024 tax year will have an impact on individuals and businesses across the UK. It's important to be aware of these changes and to plan accordingly to ensure that you are paying the correct amount of tax. If you have any questions about the new tax rates and allowances, get in touch and we can provide you with the guidance you need.
Tax affairs are complicated and we would always advise you to speak with your advisers before making any changes. For more information on how we can help you and your business please contact us at info@oldfieldadvisory.com or call 02476673160.
Please note: This article is provided for information only and was correct as at time of writing (10/05/23). Any lists and details provided above are not exhaustive and are not intended to be full and complete guidance. No action should be taken without consulting detailed legislation or seeking independent professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this article can be accepted.
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