New tax year means threshold for benefit charge linked to higher earnings rises to £60,000
Several hundred thousand families are to be better off, some by as much as £3,000, during the 2024-25 tax year after the government finally admitted that a child benefit measure brought in 11 years ago had not worked fairly.
A change to child benefit is just one of a raft of changes coming in on 6 April, the start of the new tax year, including a cut in national insurance for employees to 8% from 10%.
The main rate of national insurance contributions (NICs) paid by employees falls from 10% to 8%. This follows a cut from 12% to 10% that took effect in January this year. The Treasury said the average worker earning £35,400 would save more than £900 a year due to both cuts.
The main self-employed NICs rate falls from 9% to 6% and class 2 self-employed NICs are abolished. For many people, however, the ongoing “fiscal drag” from frozen personal tax thresholds will eat into a lot of these gains. By 2028-29 there are expected to be about 2.7 million more people paying the higher-rate tax of 40% than would have been the case if all tax allowances and thresholds had been linked to inflation, according to the Office for Budget Responsibility.
People can now sign up to several Isas of the same type every year, provided the overall maximum Isa allowance is not breached. Millions of savers and investors have Isas. The two main types are the cash Isa and the stocks and shares Isa, and the maximum you can save in Isas is £20,000 per tax year.
In terms of investments not in an Isa or pension, the dividend tax allowance has been cut from £1,000 to £500. That is down from £5,000 when it was introduced in 2016, said Sarah Coles, the head of personal finance at the investment platform Hargreaves Lansdown. “Investors face capital gains tax misery, too,” she said. This is paid on profits on investments outside Isas or pensions. The annual allowance has been cut from £6,000 to £3,000, “pushing it to its lowest level since the 1980s,” she said.
