Tax changes 2023/24

The new tax year 2023/24 has just started and in this blog post we will take a quick dive and review upcoming changes to personal, corporation and national insurance tax.

Personal tax

As the table below shows the percentages and the Personal Allowance threshold have not changed since last tax year.

Please note that the changes in Scottish tax has not been taken into account in this post.

As in previous tax year, if you have additional income as your salary, the amount above £12,570 would be taxed at basic rate at 20% up to £50,270. There is a change in the higher tax rate at 40%, as it only applies to earnings up to £125,140 of earnings, and the additional rate of tax at 45% applies on the earnings above £125,140.

The income limit for personal allowance stays without a change. As before the personal allowance will start reducing, on earnings above £100,000, £1 for each £2 of earnings and at £125,140 and above is reduced to £0.

Dividend allowance decreased to £1,000 from £2,000 in last year, which means that the first £1,000 dividends are taxed at 0%. The dividend rates says the same as per last year.

National Insurance bands

The thresholds for employee National Insurance stays the same as in previous year at £12,570 per annum, which means that the employee continue not paying neither income tax nor employee's National Insurance contributions for any earnings up to £12,570.

The Employment Allowance increased this year to £5,000 with the same additional restriction as last year, which means that it is not available for the businesses where only single person on the payroll is also a director, i.e. ‘single director employee’ limited companies and it will only apply to employers if their total secondary Class 1 liability in the previous tax year was under £100,000.

National Insurance for Self-employed

Class 2 NI rate slightly increased in comparison to previous tax year.

Class 4 NI rates stay the same as in the previous years and is still payable in addition to class 2 NI.

Capital gains tax

The capital gains tax exemption threshold has been decreased to £6,000 from £12,300 in the previous year, with no changes to the percentages payable.

Pension contributions

Annual allowance for pension contribution increased this year to £60,000 per annum from £40,000 last year and lifetime allowance of £1,073,100 charge will be removed and fully abolished in 2024/25 tax year.

Corporation tax

From 1 April 2023 the corporation tax rate has increased from 19% to 25% and the below bands have been introduced:

- companies with profits of £50,000 or less will continue to pay corporation tax at 19%

- companies with profits between £50,000 and £250,000 will pay corporation tax at 25% but marginal relief will apply

- the rate will increase in bands, with businesses whose profits are greater than £250,000 paying maximum of 25% corporation tax.

VAT

The registration threshold stays at the same level of £85,000 and de-registration is £83,000 and the Chancellor mentioned that the both thresholds would be maintained until 31st March 2024.

ISA

The ISA annual limit stays at the same level of £20,000, as well as Junior ISA of £9,000 annually.

Research and Development

Annual tax on enveloped dwellings (ATED)

Please find slightly increased rates for ATED below:

The rates should be used as guidance only as it may change in individual circumstances.