If the pundits and polls are to be believed, the Chancellor delivered what may turn out to be the government’s final Budget in early March. The headline NIC cuts and adjustments to the higher income child benefit charge will please many, alongside changes that affect the self-employed. The shifting of the £85,000 VAT threshold to £90,000 should give more headroom to small businesses. There were raised eyebrows, however, at the Office for Budget Responsibility which unpicked some of the realities unpinning the Chancellor’s numbers.

The new tax year has brought more than just the latest Budget changes but also some key adjustments already announced in previous years. The cuts to the dividend allowance – now down to £500 following last year’s initial cut to £1,000 – and the capital gains exempt amount – halved again to £3,000 from its 2023/24 level – as well as the frozen personal allowance and cut to the additional rate threshold mean that many more people may find themselves tipping into higher tax brackets. As we outline in the latest edition of our newsletter, while year end tax planning is often emphasised, making an early new tax year start with an understanding of your position is a worthwhile exercise.

Those involved with property are faced with particular hurdles. The squeeze on property and housing shortfall has prompted a number of measures. While there is ongoing controversy around legislation going through parliament on renter’s rights, the tax system just got harsher. Despite the cut to the higher rate of capital gains tax for residential disposals from 28% to 24% that took effect from 6 April, other key tax reliefs are being removed. From 1 June relief on the purchase of multiple dwellings in England and Northern Ireland will end. Ostensibly meant to curb dubious claims around ‘granny annexes’, those with genuine claims could face SDLT bills up to double the previous level. From April 2025, furnished holiday lettings also saw relief abolished and will be treated the same as buy-to-let property for tax purposes. All of which make property investment a less than straightforward option in years to come.

While some have chosen to rely on property income in lieu of a pension, at the other end of the scale, a recent report revealed that around three-quarters of self-employed individuals are not contributing to a pension. With all the demands on running your own business, it can feel that setting aside income for the future isn’t a priority. But relying on the State pension alone is unlikely to make for a comfortable retirement. The tax incentives involved in building up a pension fund shouldn’t be forgotten.

The new tax year also sees two new allowances to replace the previous pensions lifetime allowances. The lifetime lump sum allowance and the lump sum and death benefit allowance will now limit the tax-free cash benefits on retirement and death.

There’s much to consider already in 2024/25. Add to that increased charges from Companies House on a range of business administration costs, and the advice to start planning early comes into sharp focus. Find out more about these and other stories in our latest Summer 2024 newsletter.