Personal Finance

What the new tax year means for you and your finances – all changes for 2024 - 2025

The new tax year starts on April 6 2024 bringing with it a number of changes for individuals and businesses. Here's how people are affected.

Chancellor Jeremy Hunt announced his Budget in March, with changes to National Insurance and ISAs leading the headlines.

There were also announcements on the cost of living, Capital Gains Tax and the National Living Wage.

Tax year dates

The 2023/2024 tax year ends on April 5 2024.

The new tax year for 2024/25 starts on April 6 2024 and runs until April 5 2025.

List of tax changes and how they affect you

National Insurance tax cut

National Insurance has been slashed for the second financial statement in a row.

Employees will see a cut in their contributions from 10% to 8%, with the average worker saving £450.

NI was already reduced by 2% in January, with the Government saying this means the average person will be better off by £900 this year.

The self-employed will also receive a National Insurance break. Class 4 NICs are reducing from 9% to 6% for basic rate payers from April 6. Self-employed people pay 2% National Insurance on anything they earn over £50,270 and this remains unchanged.

In the Autumn Statement, the Chancellor got rid of Class 2 NICs completely and this will come into effect on April 6 2024.

The Government says the average self-employed person earning £28,000 a year will have an extra £650 in their back pocket.

(Note that self-employed people with profits less than £6,725 a year can still pay Class 2 NICs to keep their entitlement to certain state benefits.)

Income tax thresholds are staying the same.

ISA changes 2024

The ISA allowance remains frozen at £20,000 a year for 2024/25 but there are a few changes coming in.

People can only invest £20,000 a year into ISAs, although they are allowed to split that between different types of ISAs - cash, stocks and shares, innovative finance and Lifetime ISA.

Read more: Cash ISAs vs Stocks & Shares ISAs: Which is best?

The maximum you can add to a Lifetime ISA is £4,000 a year.

Previously savers were only allowed to hold one type of ISA with one provider. So all your cash ISA deposits, for example, had to be with the same provider, and all your Lifetime ISA deposits had to be with the same provider, even if you made payments in different tax years.

It meant if you wanted to switch to a new account you'd have to move all your savings from that account type across to that bank.

However, this rule is being scrapped which should help savers move to competitive rates more easily, and have a mix of easy access and fixed rates (which are both classed as cash ISAs).

A new British ISA was announced by Chancellor Jeremy Hunt during the Budget in March 2024. This is only in the proposal stage but would give savers an additional £5,000 allowance to invest in UK shares.

The Junior ISA limit has also been frozen at £9,000.

The age for opening an ISA will rise from 16 to 18-years-old. Children can still have Junior ISAs but from April 6 2024, anyone aged 17 and under will not be allowed to have more than one cash ISA. For more information on the ISA reforms for young people, click here.

Capital Gains Tax changes 2024

The higher rate of Capital Gains Tax when selling residential properties is being cut from 28% to 24% from April 2024.

The higher rate applies to people who pay the higher rate of Income Tax.

High Income Child Benefit Charge

The High Income Child Benefit Charge is a tax that applies to parents who earn above a certain threshold.

Anyone who earns more than £50,000 has to repay a certain amount of the Child Benefit, with the amount gradually increasing until the individual earns over £60,000. At this point they must repay all of the Child Benefit.

From April the starting threshold will rise to £60,000 and the Child Benefit will only have to be repaid in full once someone earns more than £80,000. This will also mean the incremental rises to the amount repaid will be half what they were.

In 2026, the Government will also change the way the HICBC is calculated. Currently it is applied to individual income rather than household income. But the Government feels this rule is unfair on single-earner households because you could have a couple earning £49,000 each (a total of £98,000) paying no HICBC while a single person earning £50,001 with no additional money coming into the house liable to pay.

The new rules for 2026 will see the HICBC move to a household-based system.

Fuel duty and alcohol duty

Fuel and alcohol duty will be frozen again.

Fuel duty will be frozen for another year, extending the temporary 5% tax cut.

Alcohol duty will continue to be frozen until February 1 2025.

VAT threshold

The VAT threshold will increase from £85,000 to £90,000 in April 2024.

Holiday home tax

Second homeowners who let their properties for short terms will lose their tax breaks from April 2025, meaning they will have to pay the same amount of tax as those who have long-term lets.

Other financial changes coming in the new tax year

State Pension increase

The State Pension is rising 8.5% from April 1 2024 after the Chancellor confirmed the triple lock was staying during his Autumn Statement.

The basic State Pension will increase from £156.20 to £169.50.

The new State Pension is rising from £203.85 to £221.20.

The basic State Pension applies to people who reached State Pension age before April 6 2016, with people after that receiving the new pension rate.

National Living Wage

The National Living Wage is rising from £10.42 to £11.44 on April 1 2024.

This is an increase of 9.8%.

Cost of Living payments

The Household Support Fund - which helps vulnerable people pay for essentials such as food and utilities - is being extended.

It was supposed to end in April but an additional £500 million has been made available for the scheme to run in England until September 2024.

Each council decides how to give out the money, depending on the needs of their communities.

Read more:

Helen Barnett

Helen is a journalist, editor and copywriter with 15 years' experience writing across print and digital publications. She previously edited the Daily Express website and has won awards as a reporter. Read more here.


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