As April unfolds, it’s essential for all taxpayers and businesses to stay up to date with all of the latest changes being introduced by HMRC. From tax adjustments, pay increases and brand new regulations, we want to help make sure you understand it all.
National Minimum Wage Increases:
This April, minimum wage will see a hefty increase, which will give a boost to the lowest earners in the UK. Rising by more than £1 an hour, all those aged 21 and over will be paid at least £11.44 an hour. The pay rise amounts to an extra £1,856 a year for someone who is working full time on minimum wage, meaning their take home annually would be £20,820.
National Insurance Is Cut Again:
Chancellor Jeremy Hunt announced a second cut to National Insurance in 2024 in the spring budget. The starter rate for National Insurance which is charged on the band of earning between £12,570 and £50,270, will be cut from the current 10% to 8%, which already fell from 12% last year. This change should happen automatically with payroll departments across the country being aware of the change and implementing it for them. But be sure to check that these changes have happened on your next payslip.
Those who are self-employed will see a similar two percent cut to their NI Contributions, which will affect around two million people. Class 4 National Insurance will see a cut of 2% from 8% to 6%.
State Pension Increases:
This April, Retirees will receive a substantial 8.5% boost to their state pension. This adjustment will elevate the ‘new’ state pension to £11,502.40 per year. The triple-lock system ensures that the state pension rises by the highest measure among average earnings growth, inflation, or a minimum of 2.5% annually. Consequently, those receiving the full new state pension can anticipate their weekly income to rise from £203.85 to £221.20, while individuals on the ‘old’ state pension will witness their weekly income climb from £156.20 to £169.50. This translates to an annual increase to £8,814 for those on the ‘old’ state pension.
Child Benefit Is Extended To More Families:
This April sees revisions to the regulations governing child benefits, potentially offering a financial boost to parents with earnings between £50,000 and £80,000. The government has implemented two significant adjustments: firstly, increasing the threshold at which child benefit payments begin to reduce, from £50,000 to £60,000. This means that individuals earning between £50,000 and £60,000 could see an increase in their child benefit entitlement.
Secondly, the government has extended child benefit eligibility up to an income threshold of £80,000, compared to the previous threshold of £60,000. Previously, a parent earning £60,000 or more would not receive any child benefit. However, with the new changes, such parents will now qualify for the full amount of child benefit, equating to £2,212.60 annually for parents with two children.
It’s important to note that eligibility for child benefits is based on the combined income of both parents. If either parent earns above the income threshold, the family may lose entitlement to the benefit. Additionally, families must actively claim child benefits as it is not automatically provided.
Dividend Tax-free Allowance Cuts:
Recent crackdowns on dividend tax have resulted in increased tax liabilities for investors and company directors. However, the upcoming reduction in the tax-free dividend allowance halved from £1000 to £500 starting from the 6th of April to further widen the tax scope. Following this cut, an additional rate taxpayer with dividends exceeding £1,000 will face an annual tax increase of £197 compared to the previous tax year, while a basic-rate taxpayer will see their annual tax bill rise by an additional £44.
Stay Up To Date On Important Changes:
As you can see, there are plenty of changes to keep track of this April. The ones we’ve covered here are just the tip of the iceberg. If you want to ensure you’re always in the loop with the latest updates, be sure to follow our LinkedIn. At Gifco, we’re committed to keeping you in the know, and making you aware of all of the latest information, so you can navigate changes smoothly.