Navigating Tax Changes: Your Guide to the 2024/25 Fiscal Year

Published by MJ posted in Resources on May 2, 2024

New research conducted by RIFT’s finance professionals has revealed important information of Tax Changes before the end of April, which is when the tax year deadline falls. Over the last ten years, the total amount of income tax receipts that HMRC has collected has reportedly climbed annually by 5.7%. The fiscal year ends on April 5th, and the Spring Budget takes effect on April 6th, which also marks the start of the new fiscal year with new tax rates and allowances.

Paying more to HMRC

A decade of tax payments has been unmatched, according to RIFT’s analysis of government statistics. In 2023, HMRC received a total of £268 million in Income Tax Receipts, indicating an average yearly growth of 5.7% from the year 2013.

This year may be particularly taxing for HMRC in terms of queries and assistance due to upcoming reforms that will impact people and businesses alike; in general, April tends to put more strain on HMRC’s resources compared to other periods.

April surge in HMRC inquiries

The government’s information shows that over the past three years (2021–2023), the average number of calls to the HMRC tax helpline in April was 12.8% greater than the average for each month for the other twelve months of the year. Thus, compared to the monthly average for the remainder of the year, the average waiting time in April was 25% greater. The people who are concerned about forthcoming changes and their potential impact, RIFT has highlighted nine key points to keep in mind as the 2024/25 tax year approaches.

 

National Insurance Contributions (NIC)

From April 6th, the main rate of Class 1 employee NICs will decrease from 10% to 8%, resulting in an overall 4p tax reduction for an estimated 27 million individuals. Families with dual earners on average salaries could gain over £1,800.

National Living Wage and National Minimum Wage Changes

1 April there will be an increase in both the National Living Wage and the National Minimum Wage. For people who are twenty-three years of age and over the current rate is £10.42 it will increase to £11.44. In addition those aged 21 and 22 will now be eligible for the National Living Wage which will help around 3 million individuals.

Dividends Allowance Reductions

The total number of dividends will decrease from £1,000 to £500 from April 6th  2024–2025, notwithstanding the fact that dividend income tax rates will not change. An estimated 4,405,000 people are impacted by this reduction, with a standard estimated loss of £155 in the tax year 2024–2025.

Pension Lifetime Allowance Abolished

Effective April 6th, the Pension Lifetime Allowance will be eliminated, accompanied by adjustments to the taxation of lump sums and lump sum death benefits, resulting in increased tax-free lump sum entitlements for the average saver in a registered pension scheme.

Capital Gains Rates For Tax Changes

For the upcoming fiscal year, the capital gains tax allowance will be halved from £6,000 to £3,000 for individuals and personal representatives, potentially leading to increased capital gains tax payments for those surpassing the current allowance. An estimated 260,000 individuals and trusts will be newly subject to capital gains tax by 2024 to 2025.

ISA Limits Freeze For Tax Changes

ISA limits will remain unchanged in 2024/25, allowing the average person to invest up to £20,000 into ISA savings products without tax implications. New provisions permit multiple subscriptions to ISAs of the same type within a year, alongside the ability to transfer funds partially between providers within the same year, offering savers opportunities to capitalize on varying returns.

Research and Development Merging with SME Schemes

The Research and Development Expenditure Credit scheme for R&D tax relief will merge with SME schemes from April 1st, necessitating claims for incurred expenditure through the consolidated scheme.

Tax refund deadlines

HMRC may owe refunds to taxpayers who have overpaid taxes. Taxpayers can make claims for overpaid taxes from the previous four tax years, with specific deadlines for each year. You must claim refunds for the 2019/20 tax year by April 5th, 2024, while subsequent years have extended deadlines.. Failure to meet deadlines could result in forfeited claims unless HMRC acknowledges an “official error,” a rare occurrence typically necessitating clear evidence of government missteps.

Bradley Post, Managing Director of RIFT, emphasized the significance of these changes, advising individuals to seek assistance promptly due to potential delays in HMRC support during busy periods, such as April. Despite a recent decision to reverse the closure of the HMRC tax helpline in April, data indicates significant surges in inquiries during this month, underscoring the importance of proactive planning and early consultation.

 

⏰ Time is ticking! Stay informed about important tax deadlines and changes for the new fiscal year. Check out our latest blog for expert insights and tips. #TaxTips #FinancialAdvice💼💰

 

FAQS

 

Q1.How can I prepare for the upcoming changes in tax regulations highlighted in the blog?

Stay informed about changes affecting you, seek professional advice, and utilize HMRC resources.

 

Q2.What are the deadlines for claiming tax refunds mentioned in the article, and what happens if I miss them?

You must claim refunds for 2019/20 by April 5th, 2024. Missing deadlines may forfeit claims unless HMRC acknowledges an “official error.”

 

Q3.How can I navigate the increased demand for HMRC assistance during the busy month of April?

 Plan ahead, seek help early, use online resources, and consider alternative avenues like tax advisors.

 

Feel free to Book a free consultation with us today for Navigating Tax Changes For 2024/25 Fiscal Year!

 

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