New Year, New Rules: Tax Year 2024/25

With the beginning of a new tax year just around the corner, now is a good time to brush up on the forthcoming changes to UK tax rules.  

Capital gains tax  

The CGT annual exemption amount will halve on April 6 to £3,000 for 2024/25 from £6,000.  

HMRC estimates that by reducing the AEA around a quarter of a million individuals and trusts will be subject to the tax for the first time by coming tax year. It expects to raise around £1.2 billion a year  as a result of the successive reductions in the AEA from April 2025.  

The higher rate of capital gains tax charged on property disposals will also be reduced from 28% to 24%. The lower rate will remain at 18%.  

The aim is to encourage more landlords and second homeowners to sell their properties, with the hope that it will free up homes for first-time buyers.  

Dividend allowance 

The dividend allowance is being halved to £500 from £1,000. Any dividends received above this level will be subject to the higher dividend rates that were introduced back in 2022. 

The rate is 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers. 

National Insurance 

The headline rate of national insurance contributions will fall from 10% to 8% for employees. For the self-employed, the headline rate will dip from 9% to 6%.  

There will be no change to the 2% national insurance rate on earnings over £50,270. 

This is the second cut to national insurance for employees this year. It was from 12% to 10% back in January, as announced in the 2023 Autumn Statement.