There’s been a tremendous amount of upheaval across the country since 30th October when Labour announced their new tax regime.
You really don’t need to look far to find either a business owner, farming representative or pension specialist express their grievance about changes the new Labour government have already implemented, or will do on 6th April this year, or indeed plan to over the next 2 years.
Just one login to LinkedIn fast tracks you to some of the struggles already being experienced across industries, causing division between communities at both a business and sociopolitical level.
Even the Americans have something to say, which is most peculiar…
So, if you would like a reminder on what’s to come this April and how it could affect you, I have broken these changes down into 6 bitesize sections so that you can take any necessary action before these changes take effect.
Have you Checked your State Pension Provision?
- Voluntary NICs will end for good on 5th April and so you have until 5th April to make absolutely final Voluntary National Insurance Contributions (NIC) to fill gaps in your National Insurance record from April 2006. It’s worth looking into if you need a guaranteed income in your retirement, as by making these voluntary contributions you will boost your state pension provision.
- Find out your State Pension provision here: Check your State Pension forecast - GOV.UK
- From 6th April, the new full State Pension will increase to ￡230.25 per week and the old Basic State Pension to ￡176.45.
If you’re a Business Owner
- The secondary Class 1 rate of National Insurance will be increased from 13.8% to 15%. This will also apply to Class 1A and Class 1B employer rates. The secondary threshold will also reduce to ￡5,000 from ￡9,100 and frozen at this rate until 5 April 2028.
- The Employment Allowance will be increased from ￡5,000 to ￡10,500 and removes the restriction on the level of previous tax years liability being less than ￡100,000.
- Business asset disposal relief and Investor’s relief – the rate of Capital Gains Tax payable on qualifying gains will increase from 10% to 14% from 6 April 2025 and then further increase from 14% to 18% from 6 April 2026. The cumulative limit for qualification remains at ￡1m for Business asset disposal relief, but reduced from ￡10m to ￡1m for Investor’s relief from 30 October 2024.
- The good news is that for as long as you’re are an employee too, you can still make employer contributions to a personal pension and deduct this from your company’s profits, in turn reducing your corporation tax liability
Individuals in Private Equity
- Carried interest – Capital Gains Tax on private equity carried interest will increase from 18% for basic rate taxpayers and 28% for higher/additional rate taxpayers into a single unified rate of 32% from 6 April 2025. Then from April 2026, carried interest will be subject to a revised regime within the income tax framework.
Overseas but Residing in the UK?
- Removal of the Non-Domiciled regime – the current remittance basis of taxation for non-UK domiciled investors is to be replaced with a simpler, residence-based scheme. Broadly those who opt-in to the scheme will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence, provided they have not been UK tax resident in the ten tax years immediately prior to their arrival. Those who have previously used the remittance basis and who are either not eligible for the new four-year FIG regime or choose not to use it, will be subject to CGT on foreign gains in the normal way but transitionally, will be able to rebase personally held foreign assets to 5 April 2017 where certain conditions are met.
- Pensions to be included in IHT calculation from April 2027 – a technical consultation paper has been published on the implementation with a deadline for responses of 22 January 2025.
- First-time buyers – from 23 September 2022 to 31 March 2025, first ￡425,000 slice of value at 0% if property consideration is not more than ￡625,000, 5% on ￡425,001 to ￡625,000; from 1 April 2025, first ￡300,000 slice of value at 0% if property consideration is not more than ￡500,000, 5% on ￡300,001 to ￡500,000.
Parents with Young Children
- High Income Child Benefit reform – The government will not proceed with the reform to base the High-Income Child Benefit Charge (HICBC) on household incomes rather than one person’s earnings in the household. They will however make it easier for all taxpayers to get their claims correct by allowing employed individuals to pay the charge via PAYE and pre populate self-assessment returns with Child Benefit data for those not using this service.
- You can still make pension contributions or charitable donations to bring your ‘Adjusted Net Income’ to below ￡100,000 in order to apply for ￡2,000 tax-free childcare and/or childcare support.
On a separate note, if you’re yet to hear that I achieved Chartered status last year, you can listen back to this very short podcast for some insight into how this benefits the service I provide for clients.
I provide some examples of what I do now (versus before) to help people with their finances.
