Whether you’re self-employed, a high earner, a company director or a sole trader, you want your tax affairs to be as efficient as possible. After all, everyone likes a little more in their pocket, and you don’t want to give too much to the taxman unnecessarily.

Let’s take a look at some of the big tax changes that came into effect from the 6th April 2024, so you can plan your tax affairs as efficiently as possible.

1. National Insurance rate changes

As of 6th April, if you’re a self-employed worker with an annual income above £12,570 you’re no longer required to pay Class 2 National Insurance Contributions (NICs) – but you will still get benefits like the State Pension. The main rate of Class 4 self-employed NICs is also being cut from 9% to 8%.

If you take home between £6,725 and £12,570, you’ll continue to have access to contributory benefits through National Insurance credit, without paying NICs.

2. ISA freeze and multiple ISAs

The limits you can save tax-free in an ISA will be frozen for 2024/25, at:

  • £20,000 for ISA contributions
  • £9,000 for Junior ISA contributions
  • £4,000 for Lifetime ISA contributions

One key change is around multiple ISAs. You will now be able to pay your £20,000 into a range of ISAs. This means you can open new cash ISAs if you find a better deal. Or you could put some funds in a fixed-rate ISA and the rest in an easy-access cash ISA. If you’re investing in stocks and shares ISAs, you’ll also be able to spread your investments across different providers.

From 6th April, you’ll also be able to make partial transfers between ISA providers during the tax year. If you’ve already paid £15,00 into one ISA since 6th April, you could move £5,000 to a different provider. Before this year, you would have had to move the whole lot.

3. Income tax changes

Both the higher rate and additional rate of tax are changing from 6th April, specifically the top band for higher rate taxpayers is falling from £150,000 to £125,140. This means that anything you earn over £125,140 will be charged at 45%.

4. Tax-free dividend reduction

If you’re a director or a company shareholder of a limited company, you’ll no doubt take much of your income from dividends. Previously you could take £2,000 in dividends tax-free, but this was halved last year and is set to be halved again on 6th April. This means you can take just £500 from the business as a tax-free dividend.

The dividends you are taxed on will now also incur a National Insurance charge too. The upshot is you can take less tax-free, and you’ll be charged more tax on any dividends taken outside the £500 limit. It makes sense to look carefully at the most tax-efficient way to take profits out of the business and re-evaluate how you pay yourself.

5. Capital gains tax exemption cuts

Another tax benefit set to be halved in April is the capital gains tax exemption – from £6,000 to £3,000. This means you can only make tax-free gains on your investments of £3,000 – just two years ago this was set at £12,300, so it’s a big drop. 

If you own investments outside ISAs or plan to sell a valuable asset like a second home, it’s crucial to be up on these tax changes.

For most of us, the end of the financial year comes and goes without much thought and any changes to our personal financial situation aren’t noted until we get our next pay slip, or we talk to our accountant.

However, this year there are a raft of changes due to be implemented that will impact everyone from those in full-time employment to the self employed - some positively, some not so positively. For those who might be in need of advice, be warned, you may struggle to receive it from HMRC in a timely manner.

While the decision to shut the HMRC tax helpline from April was reversed last week, figures show that over the last three years, the volume of calls received in April sits around 13% higher than the monthly average seen throughout the rest of the year. What’s more, the average speed of answering these calls has also sat some 25% higher during April when compared to the annual average seen over the rest of the year. So if you are in need of help and advice, you’re best advised to seek it sooner, rather than later. Bradley Post, CEO of RIFT Refunds.

Want to reduce your tax bill?

When it comes time to do your tax return, you’ll want to make the most of your money and reduce your tax bill where possible. It pays to understand the tax changes that are now in place and how they affect you.

At RIFT Refunds, we can guide you through the whole tax return process using our expertise, helping to cut your tax bill and maximising your income. Our team makes tax relief easy and stress-free. We handle everything for you and provide personalised advice tailored to your situation.

Get in touch with RIFT and start the process today.