Coming in hot on the heels of Budget 2024 is the new 2024 tax year and with it there will be a host of changes to tax and your take home pay.
Whilst personal allowances and the higher rate threshold are still continuing to be frozen for the 2024 Tax Rates and Allowances, we will see major changes to National Insurance rates.
Near 30 million people will benefit from lower NIC rates starting next week. People on PAYE will see their main NIC rate drop from 10 percent (which was introduced this January) to 8 percent, while the self employed will see their main rate drop from 9 percent to 6 percent. The self employed will also see the weekly class 2 NIC's abolished. The cuts will provide a significant cut to deductions from income and a rise in take home pay over 2023 (though not factoring for inflation). You can calculate if you will be better off using our dedicated calculator.
On average, people will see tax savings of over £600 this year. This is based on the median salary of £27,500 based on income percentile - you can check your income percentile too!
People paying Plan One student loans through their payslip will see changes as the threshold has been raised by nearly £3,000 - equivalent to around £270 a year (£23 a month).
Households receiving Child Benefit will see new measures to assuage the effect of the 'clawback' High Income Child Benefit Charge. This is a charge paid if one person from the household earns over the higher rate threshold (£50,000 gross). For 2024, the threshold is being upped to £60,000 with the taper effect doubled so only a household with someone earning £80,000 and above will see the full Child Benefit reclaimed via the charge. It's a little complicated with how the income is determined so we built an easy High Income Child Benefit Charge Calculator to show you exactly how much you could be liable for this year and to check previous years.
The Chancellor did promise to remove the charge completely from 2026, replacing it with a household based charge, but that will likely be after a General Election so could change.
Other changes include a drop in the Capital Gains Tax Rate for residential sales for higher earners from 28% to 24%, use our capital gains tax calculator to see the effects.
The dividend tax-free allowance is halved in 2024 from the £1,000 last year to £500. If you take your income from your company through dividends or have multiple income sources this change will have an effect.
Scottish taxpayers see some pretty major changes as an additional tax band is added to the tax system. Our calculators are updated for this, just select Scotland as your tax region to see the changes.