5 Essential Changes To Uk Tax Rates For 2024-25

The UK tax landscape is continually evolving, and the fiscal year 2024-25 is set to bring about significant changes. Staying informed about these alterations is crucial for individuals and businesses alike. Here are five essential changes to UK tax rates for the upcoming fiscal year.

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1. Income Tax Thresholds Adjusted 📈

The personal allowance, which is the amount you can earn before paying income tax, will see an increase. For the 2024-25 tax year, the threshold is expected to rise, allowing individuals to retain more of their earnings before tax kicks in.

Expected Changes in Rates:

Important Note: "Income tax changes can significantly impact your overall finances, so it's wise to plan accordingly."

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2. National Insurance Contributions (NICs) 🌍

Changes in National Insurance contributions are on the horizon. For employees and employers, there will be adjustments to the NIC rates.

Key Updates:

• The Employee NIC rate will see a slight decrease from 12% to 11.5% for the earnings between the Primary Threshold and Upper Earnings Limit.
• The Employer NIC will also reduce from 13.8% to 13.5%.

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3. Corporation Tax Increase 🏢

Businesses will need to prepare for an increase in the Corporation Tax rate starting from April 2024.

• The Standard Rate of Corporation Tax is set to increase from 19% to 25% on profits over £250,000.
• Small businesses with profits below £50,000 will still benefit from a lower rate of 19%.

Corporation Tax Rate Changes:

Important Note: "Corporation tax impacts business decisions, and consulting with a tax advisor may be beneficial."

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4. Capital Gains Tax (CGT) 🏠

Changes in Capital Gains Tax rates are also anticipated for 2024-25.

• The annual exempt amount will drop from £12,300 to £6,000, meaning taxpayers will pay tax on smaller gains than before.
• The rate for higher earners will remain 20%, while basic-rate taxpayers will pay 10%.

Implications:

With a reduced exemption, more individuals will find themselves liable for Capital Gains Tax.

Important Note: "It is essential to track your assets and their value to avoid unexpected tax bills."

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5. Changes to Inheritance Tax (IHT) 🏡

Inheritance Tax thresholds will also see adjustments.

• The IHT nil-rate band will remain frozen at £325,000 for 2024-25. This is unchanged from previous years.
• The residence nil-rate band will continue at £175,000.

However, given the rising property values, many families may find themselves more impacted by IHT as the thresholds do not increase.

Inheritance Tax Overview:

Important Note: "Planning for inheritance tax is crucial, as property value increases can impact overall liabilities."

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With these five essential changes to UK tax rates for 2024-25, individuals and businesses must stay aware of how their financial plans may need adjustments. Being proactive can ensure that you are prepared for the evolving tax landscape, enabling you to make the most of your financial situation in the coming year.