Finance Acts 2024-25 tax update and Rolling Tax Planner

This rolling planner tracks the key tax announcements that impact the 2024-25 tax year and beyond. This planner is updated on an ongoing basis. 

A guide for subscribers.

The general election was held on July 4th, 2024 changing the goverment who notified details of tax proposals included in its manefesto on 29 July 2024.

Income Tax, claims & reliefs

Income Tax 

Income Tax rates, allowances and thresholds

From 6 April 2024: 

  • The Personal allowance remains at £12,570 and the basic rate band remains at £37,700.
  • These are frozen until April 2028. 
  • The Blind person's allowance increases from £2,870 to £3,070.
  • The Married couple's allowance, where one spouse is born before 6 April 1935:
    • The maximum allowance increases from £10,375 to £11,080 and the minimum amount from £4,010 to £4,280.
    • The rate of the allowance remains 10%.
    • The income limit, at which the allowance becomes restricted is £34,600. When this is exceeded the allowance is reduced by £1 for every £2 exceeding the limit, down to the minimum of £4,010.
  • The Transferable Marriage Allowance remains at £1,260.
  • The Additional Rate Threshold (ART) remains £125,140.

See Income Tax rates & allowances

Savings 

No changes to rates and allowances for 2024-25:

  • The starting rate for savings income limit remains at £5,000
  • ISA , junior ISA and child trust funds limits remain at £20,000, £9,000 and £9,000.

Spring Budget 2024 announced the introduction of a UK-focused ISA.

  • It gives an additional £5,000 allowance to the current £20,000 limit for those investing in the new ISA, ideally supporting UK companies.
  • HM Treasury opened a Consultation inviting views on how to design and implement the UK ISA. It runs from 6 March 2024 to 6 June 2024.

 See ISA Guide (Subscribers)

Help to Save reform

  • It was announced at the 2023 Autumn Statement that the government is reforming the Help to Save scheme.
  • A Consultation which ran from 27 April to 22 June 2023.

See Help to Save scheme

Dividend tax

From 6 April 2024:

  • The dividend allowance reduces to £500 from £1,000.
  • Rates remain at: Basic rate 8.75%  Higher rate 33.75%, and Additional rate 39.35% 

See Dividend tax

High-Income Child Benefit Charge (HICBC)

From 6 April 2024

  • Adjusted net income threshold for the High-Income Child Benefit Charge (HICBC) rises from £50,000 to £60,000.
  • For individuals with income above £80,000, the tax charged will be equal to the amount of the Child Benefit payment.
  • For those with income between £60,000 and £80,000, the rate at which HICBC is charged is halved.
    • This will be equal to one per cent for every £200 of income that exceeds £60,000.
    • The amount of Child Benefit payable will be unaffected by these changes.
  • For new Child Benefit claims made after 6 April 2024, any backdated payment will be treated for HICBC purposes as if the entitlement fell in the 2024 to 2025 tax year if backdating would otherwise create a HICBC liability in the 2023 to 2024 tax year.
  • There will be a consultation on creating a household-based system from April 2026.
  • There will be a consultation on the rules for allowing HMRC to collect details of household income.

See High Income Child Benefit Charge (HICBC)

Gift Aid

From TBC:

  • The Gift Aid legislation will be amended to ensure that eligible charities which operate subscription models can continue to claim Gift Aid while complying with the Digital Markets, Competition, and Consumers Bill.
  • It is intended that these amendments to the Gift Aid regime will be in place by the time the relevant provisions of the Bill come into force.

See Gift Aid: How it works

Tax year basis: Basis year reform

  • This affects sole traders or partner in partnerships which have accounting periods (a/p) that end on dates other than 31 March to 5 April.
  • 2023-24 is the transitional period, tax year basis is fully operative from 6 April 2024.
  • A transitional profit is calculated from the end of the a/p in 2023-24 to 5 April 2023.
  • This is adjusted for Overlap relief n automatic five-year spreading rule will apply to the additional profits.
  • Consultation: Income Tax Basis Period reform and Responses to the consultation

See Basis Year Reform and Accounting periods and basis periods

Making Tax Digital for Income Tax (MTD for SA)

  • From April 2026: self-employed businesses and landlords with business turnover above £50,000 report under MTD for Income Tax Self Assessment (ITSA).
  • From April 2027: self-employed businesses and landlords with business turnover above £30,000 report under MTD for ITSA
  • From tba: other Income Tax, general partnerships and partnerships.

See Making Tax Digital Index & Timeline

Free Childcare

The Childcare (Free of Charge for Working Parents) (England) Regulations 2022 provide that:

From April 2024:

  • Children from the age of two will be entitled to 15 hours of free childcare.
  • Children from 3 to 4 will be entitled to 15 hours of childcare, which can be increased to 30 if the parents are eligible (see below).

From September 2024:

  • Children from the age of 9 months will be entitled to 15 hours of free childcare.
  • Children from 3 to 4 will be entitled to 15 hours of childcare, which can be increased to 30 if the parents are eligible (see below).

From September 2025:

  • Working parents of all children over 9 months but under 5 will be entitled to 15 hours of free childcare, this can be increased to 30 if the parents are eligible (see below).

It is worth noting that the free hours of childcare are for 38 weeks of the year.

See Childcare: Free and Tax-free Childcare

Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) extension

  • Finance Act 2024 to extended the existing sunset clauses for the EIS and VCT schemes from 6 April 2025 to 6 April 2035.
  • This will continue the availability of Income Tax and Capital Gains Tax reliefs for investors in new shares issued before 6 April 2035 by EIS-qualifying companies and VCTs. 

See EIS Subscriber Guide

Consultation: charities tax compliance: responses awaited

  • In April 2023, HM Revenue and Customs launched a consultation ‘Charities tax compliance’ which explores possible changes allowing HMRC to tackle charities that obtain reliefs in ways that are not intended. 
  • The consultation ran from 27 April to 20 July 2023. 

 See Charities tax compliance consultation

Expanding the cash basis

From 6 April 2024

  • Finance Act 2024 makes the cash basis the default method for calculating trading profits for the self-employed and partnerships.
    • The turnover, interest, and loss relief restrictions are removed from the cash basis (note: losses subject to the Cap on Income Tax reliefs).
    • Businesses not wishing to calculate their profits using the cash basis will need to make an election to use the accruals basis.
  • The measure does not affect companies, property businesses, or businesses that are otherwise excluded from using the cash basis, such as mixed partnerships, Limited Liability Partnerships, or businesses claiming farmers’ or artists’ averaging relief.
  • This follows a previous consultation. See Consultation: Expanding the Cash Basis
  • Policy paper: Expanding the Income Tax cash basis for self-employed individuals and partnerships

See Cash Basis for Income Tax

Cryptoassets reporting

From 6 April 2024:

  • Reporting changes on Self Assessment tax return forms SA108 (Capital gains summary page) and SA905 (Trust and estate capital gains page) requiring amounts in respect of cryptoassets to be separately identified.
  • The changes will be introduced on the forms for the tax year 2024-25.

Exemption from Income Tax for low-income trusts and estates

From 6 April 2024:

  • Trusts and estates with income below £500 will no longer be subject to Income Tax, raising the previous £100 exemption.
    • This is an all-or-nothing relief: if the estate or trust has income of £501 the whole amount will be taxable and not just the excess over £500.
    • Where a settlor has a number of discretionary and/or accumulation and maintenance trusts, the £500 limit will be split amongst those trusts but with a minimum level per trust of £100. Other non-discretionary trusts settled by the same individual, such as interest in possession trusts, will not be taken into account.
  • Beneficiaries of UK estates will not pay tax on estate income treated as paid from income within the personal
    representatives’ £500 de minimis amount.
  • Amendments also provide that the income received by an estate beneficiary is savings income where it was savings income of the personal representatives. It is also clarified that an estate beneficiary’s gross taxable income and tax credit should reflect the tax previously paid by the personal representatives.
  • Policy paper: Simplifications for trusts and estates

See Acting for a trust? Start here… and Estates: Income Tax and Capital Gains Tax

Removal of default rate for first £1,000 of discretionary trust income

From April 2024 all income including the first £1,000 will be taxable at the following rates:

  • Dividend income: 39.35%.
  • All other income: 45%.

Policy paper: Simplifications for trusts and estates

See Acting for a trust? Start here…