As usual, the beginning of a new tax year brings about many finance-related changes that will affect your business. Some of these were only announced recently – during the Spring Budget.
So, what changes can you expect to impact your company accounts for the 2024/25 tax year? Read on to find out, as well as what you could be doing to improve your tax efficiency for the year ahead.
NICs
There have been various changes to National Insurance contributions (NICs). Firstly, the main rate of Class 4 NICs has seen a reduction from 9% to 6%, which will benefit those who work for themselves. What’s more, Class 2 NICs have been removed for the self-employed altogether. It’s worth noting that while this is advantageous, some business owners opt to pay them voluntarily to qualify for specific state-related benefits.
Dividend allowance
The tax-free dividend allowance has been halved – now, it’s only at £500. This comes after it was cut in half to £1,000 the previous tax year, meaning the self-employed aren’t able to be as tax efficient in this way.
Capital Gains Tax
On a similar note, the Capital Gains Tax annual exempt amount has seen a deduction from £6,000 to £3,000. It was originally at £12,300 before it was reduced to £6,000 in 2023, so this year’s 50% decrease is another blow to the self-employed.
National Minimum Wage
The National Minimum Wage (NMW) has increased to £11.44 an hour – in the 2023/24 tax year it was at £10.42. This means you’ll have to account for an additional 9.8% in your payroll for those aged 21 or over.
VAT registration
As for the VAT registration threshold, this is rising from £85,000 to £90,000. The idea is to help SMEs reduce the administrative and financial challenges related to registering and managing VAT. This will benefit businesses, though it’s recommended to get ahead and register before you hit the threshold so that you can be more effectively prepared when it does.
Tax reliefs
Finally, the Retail, Hospitality and Leisure Business Rates Relief scheme will be extended for another year. Eligible and occupied retail, hospitality and leisure properties stand to benefit from a 75% relief on business rates limited to £110,000 per business. It’s wise to take advantage of reliefs like these – there are plenty available that you may be eligible for, such as business rates relief and Corporation Tax relief.
Tackle tax changes with Nabarro Poole
There’s a lot to absorb when it comes to tax changes for the 2024/25 year, and while some may not have a positive effect, you can work to increase your tax efficiency where possible.
By using a small business accountant like Nabarro Poole, you’ll have the knowledge and support to help you make the most of your accounts. We can assist with the likes of tax, budgeting, forecasting, and so much more. Our specialists have done it for many businesses and we can do it for yours as well.
To benefit in the 2024/25 tax year and beyond, speak to our friendly team today.
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