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The main rate of employee NICs has been cut to 8% and the rate for self-employed people went down to 6%. Self-employed people will no longer have to pay Class 2 NICs. However, those with profits below the small profits threshold of £6,725 may wish to make voluntary contributions to retain access to contributory benefits.
Only the first £500 of dividends is now tax free, down from £1,000 in 2023/24. This, alongside the Class 4 NIC reduction, may make self-employment more attractive than working through a limited company.
the annual exempt amount is now just £3,000. However landlords will welcome the cut from 28% to 24% in the CGT higher rate on residential property.
The cash basis is now the default method of calculating business profits for self assessment.
The beneficial regime for landlords for short-term letting of furnished accommodation will be abolished from 6 April 2025. Property owners will no longer be able to claim certain business reliefs. The income will no longer count as pensionable earnings, which may affect pension planning.
The registration threshold has risen to £90,000 and the deregistration threshold is now £88,000. Some businesses will benefit from deregistering.
The remittance basis of taxation for individuals not domiciled in the UK will be replaced from 6 April 2025 with an optional Foreign Income and Gains (FIG) regime based on residence, which will be available for up to four years. After that period, all UK residents will be taxed on their worldwide income. Non-doms will need to prepare for these changes and the intended move to a residence-based regime for inheritance tax.
If you may be affected by any of these changes, please get in touch to discuss your planning.
