Looking ahead to what is in store for businesses in 2024

As the conclusion of the tax year approaches on 5 April 2024, it is time for many businesses to turn their attention to policies set to take effect in the upcoming tax year. Below, we will look into some of the main changes that will take effect from April:

Reduction in Dividend Allowance

While current dividend income tax rates will stay unchanged, the Dividend Allowance will be reduced from £1,000 to £500 on 6 April 2024.

This cut will affect an estimated 4.4 million people in 2024/25, with an average loss of around £155.

NIC updates

Chancellor Jeremy Hunt announced substantial reforms to the National Insurance Contributions (NICs) system in his 2023 Autumn Statement. From 6 January 2024, the government has reduced the main rate of Class 1 employee NICs from 12% to 10%. The government has projected that the ordinary worker earning £35,400 will enjoy a tax decrease of more than £450 in 2024/25. This measure is expected to deliver a tax break for 27 million people across the country.

In addition, beginning 6 April 2024, Class 2 NICs will be altered. Self-employed workers whose profits exceed £12,570 will no longer be obliged to pay Class 2 NICs. However, they will retain access to contributory benefits like the State Pension.

Self-employed people with profits between £6,725 and £12,570 will continue to be eligible for contributory benefits via a National Insurance credit, without having to pay NICs. Individuals with profits of less than £6,725 and others who voluntarily pay Class 2 NICs will continue to be eligible for contributing benefits.

Furthermore, from 6 April 2024, the government would reduce the primary rate of Class 4 self-employed NICs from 9% to 8%. According to the administration, the cuts will benefit almost two million people.

Abolishing the pension’s Lifetime Allowance

The Pensions Lifetime Allowance will be withdrawn in 2024/25. Changes will be made to clarify the taxation of lump amounts and lump sum death payments, as well as the application of safeguards beyond the tax treatment of foreign pensions, transitional provisions, and reporting obligations.

ISA limits frozen

The restrictions on Individual Savings Accounts (ISAs), Junior ISAs, Lifetime ISAs, and Child Trust Funds (CTFs) will be frozen in 2024/25.

However, beginning in April 2024, modifications will be made to enable numerous subscriptions to the same kind of ISA each year, as well as partial transfers of ISA money between providers during the year.

Combining R&D and SME initiatives

The government has stated that the Research and Development Expenditure Credit (RDEC) and SME programmes will be combined, with expenditures spent in accounting periods starting on or after 1 April 2024 being claimed under the unified scheme.

National Living Wage and Minimum Wage

The government adopted the Low Pay Commission’s recommendations and announced increases to the National Living Wage (NLW) and the National Minimum Wage (NMW), which will take effect on 1 April 2024. Furthermore, from this point forward, the NLW will be extended to those aged 21 and 22. The apprenticeship rates shown below apply to all apprentices under the age of 19, as well as those 19 and over who are in their first year of apprenticeship. The rates are as follows:

Changes in business rates in England

England’s small business multiplier will be fixed for another year beginning 1 April 2024. The 75% Retail, Hospitality, and Leisure Relief will be extended through 2024/25. The standard multiplier will be increased in accordance with the September Consumer Prices Index.

If you want to learn more about any of the subjects featured in this blog – or if you want help elevating your business to the next level in 2024 we’re here to help. Contact JW Hinks on 0121 456 0190 our team of experienced professionals will help to ensure you are taking every necessary step to give your business a competitive edge while remaining compliant with all relevant rules and regulations.