As we approach the end of the tax year now is a good time to consider some of the changes that have taken place in the 2023/24 tax year
Capital Gains Tax (CGT)
The annual exempt amount (the amount of gain that can be made without incurring a CGT liability) was reduced from £12,300 in 2022/23 to £6,000 in 2023/24 and will reduce further to £3,000 in 2024/25 so if you are considering disposing of any assets before 5 April please bear these amounts in mind as it may be worth making disposals of, for example, shares with gains in order to use the higher allowance. In particular if you are in the advanced stages of selling a property do remember that it is the date of exchange of contracts which determines the date of disposal for tax purposes, not the date of completion (although often these can be the same) – this can be important.
Tax and NI rates
There have been no changes in income tax rates or bands or in the personal allowance, but employees’ National Insurance was reduced to 10% in January, and the threshold at which it became payable was raised to the same figure as the personal tax allowance of £12,570. The freeze in personal allowances has meant that employees in receipt of inflationary pay rises will pay more a bigger proportion of tax on their income and an increasing number will be pushed into higher rate. It may therefore be a good time to consider additional pension contributions and also to make sure that you have kept a record of all Gift Aid donations you may have made as these can all reduce your possible higher rate tax.
Working from home
During the COVID affected years HMRC were more generous in granting relief for the expense of working from home but that generosity has now come to an end and the rules are now more restrictive, especially for employees. As an employee you can only make a claim if you have to work from home because your job requires you to live far away from your office or your employer does not have an office You cannot claim relief if you choose to work from home. This includes if your employment contract lets you work from home some or all of the time, or your employer has an office, but you cannot go there sometimes because it’s full. If you are eligible the allowance is £6 per week. For the self-employed it is easier to make a claim and an allowance will routinely be included in your accounts either using the HMRC flat rates or using an estimate of actual costs. Please contact us if you have any further questions relating to the points above.
The above summary is for information purposes only, based on the tax measures in place at the time of issue, and should not be relied on without taking further professional advice