Tax rates

To help you understand taxation easier we have put together a summarised income tax table below. If you want to know more about the upcoming changes in tax rates and thresholds or would like some additional help or support, reach out to our team at 0117 256 5052 or email us at info@taks.org.uk and we will be happy to help

INCOME TAX RATES: ENGLAND, WALES & NORTHERN IRELAND (NON-DIVIDEND INCOME)

                                                                                              2023/24                   2022/23                          2021/22

     0% starting rate for savings only                                 £5,000                       £5,000                          £5,000

     20% basic rate tax                                                      £12,571-£50,270         £12,571-£50,270          £12,571-£50,270

     40% higher rate tax                                                     £50,271-£125,140       £50,271-£150,000       £50,271-£150,000

     45% additional rate tax Above                                    £125,140                   Above £150,000          Above £150,000

• The income tax additional rate threshold will reduce from £150,000 to £125,140 from 6th of April 2023.

• Personal tax thresholds – ie personal allowance, basic and higher rate thresholds for income tax – are maintained until April 2028 at a current level of £12,570 and £50,270.

• Basic rate of income tax will be maintained at 20%.

• Married Couple’s Allowance and Blind Person’s Allowance will be uplifted by 10.1%, from 6 April 2023.

CAPITAL GAINS TAX

Tax year                                                                                      2023/24             2022/23             2021/22

Annual exempt amount                                                         £6,000                     £12,300             £12,300

CGT Rate – basic rate taxpayer – Residential property        18%                       18%                    18%

CGT Rate – higher rate taxpayer – Residential property      28%                       28%                   28%

CGT Rate – basic rate taxpayer                                                10%                       10%                     10%

CGT Rate – higher rate taxpayer                                               20%                      20%                    20%

DIVIDEND INCOME ALLOWANCES AND TAX RATES

Tax year                                                                                        2023/24             2022/23             2021/22

Dividend allowance tax free                                                       £1,000                 £2,000              £2,000

Dividend income basic rate tax                                                  8.75%                 8.75%                   7.5%

Dividend income higher rate                                                       33.75%              33.75%                 32.5%

Dividend income additional rate                                                39.35%              39.35%                38.1%

• From 1 April 2023, the government will increase the National Living Wage (NLW) by 9.7% to £10.42 an hour, for those aged 23 and over.

Dividend allowance

• Dividend allowance is reduced from £2,000 to £1,000 from April 2023 and to £500 from April 2024. The threshold of £2,000 has been in place since April 2018.

• Inheritance tax nil-rate band and residence nil-rate band – thresholds are maintained at the current level until April 2028.

• The inheritance tax nil rate bands are already set at current levels until April 2026 and will stay fixed at these levels for a further two years until April 2028. The nil-rate band will continue at £325,000, while the residence nil-rate band will continue at £175,000, and the residence nil-rate band taper will continue to start at £2m.

• Qualifying estates can continue to pass on up to £500,000 and the qualifying estate of a surviving spouse or civil partner can continue to pass on up to £1m without an inheritance tax liability.

• The annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023 then £3,000 from April 2024.

• Stamp Duty Land Tax (SDLT) cuts for England and Northern Ireland will remain in place until 31 March 2025. On 23 September 2022, the government increased the nil-rate threshold of SDLT from £125,000 to £250,000 for all purchasers of residential property in England and Northern Ireland and increased the nil-rate threshold paid by first-time buyers from £300,000 to £425,000.

• The maximum purchase price for which First Time Buyers’ Relief can be claimed was increased from £500,000 to £625,000. This will now be a temporary SDLT reduction which will remain in place only until 31 March 2025.

• From April 2023, the planned increase in the corporation tax rate to 25% for companies with over £250,000 in profits will go ahead. Small companies with profits up to £50,000 will continue to pay corporation tax at 19%.

• Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate.

• Annual Investment Allowance has been confirmed at a permanent rate of £1 million from 1 April 2023.

Research & Development

• For expenditure incurred on or after 1 April 2023, Research and Development (R&D) tax reliefs will be changed as follows:

• the small and medium-sized enterprises (SME) additional deduction will decrease from 130% to 86%

• the SME credit rate will decrease from 14.5% to 10% and

• R&D expenditure credit rises from 13% to 20%.

• The chancellor has announced electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025.

• Company car taxes are under review and are going to be set up until April 2028 to provide long term certainty for taxpayers and industry in Autumn Finance Bill 2022. Rates will continue to incentivise the take up of electric vehicles:

• appropriate percentages for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1 percentage point in 2025-26; a further 1% in 2026-27 and a further 1% in 2027-28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars

• rates for all other vehicles bands will be increased by 1 percentage point for 2025-26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026-27 and 2027-28.

• The VAT registration and deregistration thresholds at £85,000 will not change for a further period of two years from 1 April 2024.

Annual Tax on Enveloped Dwellings

• The annual chargeable amounts for the ATED will be uplifted by the September CPI figure of 10.1% for the 2023-24 ATED charging period.

Online Sales Tax (OST)

• The government has clearly stated that it has decided not to introduce an OST, an idea put forward by certain stakeholders in the context of business rates reform. The government’s decision reflects concerns raised about an OST’s complexity and the risk of creating unintended distortion or unfair outcomes between different business models.

• This does bring a degree of certainty in future planning for many online retailers and – along with the rates reforms announced – clarity for those with fixed retail premises.