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The new tax year of 2023-24 is approaching rapidly.
With only one month to go now until the new tax year, it’s a good time for a round up of some of the changes in store for 2023-24 tax year for both individuals and companies. With so many updates that were announced, then reversed or altered at the end of last year, it’s been easy to lose track of the final outcomes.
There may be changes which affect the decisions you make in the final tax month of 2022-23. For example, around the timing of dividends, capital gains or company profits.
The personal tax thresholds and rates relate to England, Wales and Northern Ireland.
The main change is that the additional rate threshold will drop from £150,000 to £125,140. This brings it in line with the amount at which the personal allowance is fully lost. Between £100,000 and £125,140 it tapers by £1 for every £2 of income.
Tax rates for basic, higher and additional rate will remain at 20%, 40% and 45%.
There were lots of changes and reversals in 2022-23, but (so far) there are no further changes due for 2023-24.
The extra 1.25% that was added to Class 1 National Insurance rates from April 22 was supposed to come into force as a separate tax from April 23. This was cancelled and Class 1 NIC was reduced by 1.25% in November 2022.
Current rates are 12% and 2% and will remain at that level for 2022-23.
The threshold at which you pay Class 1 NIC was increased in line with the personal allowance to £12,570 in July 22. For 2022-23 it will remain at this level.
These changes for 2023-24 tax year could mean more or higher tax, especially for dividends, capital gains and corporation tax. You should potentially consider what’s going to fall in March and what will fall in April. A few days difference in timing could make a significant difference to tax.