The beginning of April brings a new financial year and important changes to the taxes we have to pay.
Most tax reforms came in on Sunday (April 6), the start of the new tax year, although a number kicked in earlier in the week.
Britons need to get up to speed with alterations to reporting requirements and how landlords are taxed.
Many measures are part of the government’s plans to raise revenue for a public spending drive and to improve the Treasury’s financial position.
Employer National Insurance increase
The rate of employers’ national insurance contributions (NICs) has gone from 13.8% to 15%.
The threshold for these payments is £9,100 to £5,000.
However, the Employment Allowance, which allows certain, often smaller employers to reduce their NIC liability, increased from £5,000 to £10,500.
Council tax rises
These changes took effect on April 1. Council tax is going up by an average 5% in England, 6% to 15.6% in Scotland and 4.5% to 9.5% in Wales.
Increases in Scottish income tax thresholds
Scottish taxpayers can now expect to pay £14.51 less income tax in cash terms.
Basic and intermediate rate thresholds rose by 3.5% on April 6.
All other income tax thresholds in Scotland remain the same.
Income tax thresholds in England, Wales, and Northern Ireland are also frozen.
Higher stamp duty land tax
More homeowners now have to pay Stamp Duty Land Tax as a temporary cut in rate thresholds comes to an end.
Whereas you previously only had to pay stamp duty if your property was your only residence and worth over £250,000, it will now cover those over £125,000.
The threshold for first-time buyer relief has also fallen from £425,000 to £300,000, while it will be £125,000 for other buyers.
The maximum purchase price for first-time buyers relief has also dropped to £500,000,
Higher interest on late payments
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Those who pay taxes late now face higher interest rates when they do pay.
Interest rates for this are rising from 7.5% to 8.5%.
New reporting requirements for self-employed
As of yesterday, taxpayers who start or cease to trade now have to report the start and end dates on their self-assessment tax return.
This was previously only a voluntary requirement.
New reporting requirement for company directors
Directors of close companies (owner-managed businesses) must now separately report dividend income received from their companies and their percentage shareholding on their self-assessment tax return.
They must also report their company’s name and registration number.
Car tax changes
Car tax, officially called Vehicle Excise Duty rates, has risen in line with Retail Price Index inflation.
The tax is paid every year and is mandatory for all vehicles registered in theUK.
The rate is paid based on a vehicle’s CO2 emissions, which is what is changing this financial year.
There are the biggest price hikes for the cars with the highest emissions. Those who buy the most polluting petrol and diesel cars, which emit over 255g/km, now have to fork out £5,490.
This is up from the previous £2745.
Changes to capital gains tax reliefs
Capital Gains is a tax charged on the profits made when selling, giving away or exchanging an asset.
This includes a second home, shares in companies, art or jewellery.
Company owners and the self-employed have to pay this tax as well as individuals.
Rachel Reeves raised the lower rate of Capital Gains Tax from 10% to 18%.
The higher rate has shot up from 20% to 24%.
Taxpayers eligible for Business Asset Disposal Relief and Investors’ Relief will now have to pay a higher rate, rising from 10% to 14%.
This will go up to 18% next financial year.
Landlords lose access to allowances
Up until last week, homes that qualify as holiday lets, called furnished holiday lettings, had a tax advantage over other property businesses.
This separate tax regime was scrapped for companies and other businesses.
New tax rules for non-doms
The October Budget abolished the ‘non-dom’ status, which allows claimants to avoid paying tax in the UK on overseas earnings.
Now long-term residents face UK tax on their worldwide income and gains even if their UK home is now their permanent one.
Previously, rules meant non-doms could avoid paying UK tax rates on foreign income and gains as long as they did not bring it into the UK.
Agricultural property relief extended
Landowners who decide to use their land for environmental purposes will now be able to claim a special tax break called Agricultural Property Relief (APR).
The 100% full tax relief will now only be eligible on the first £1 of their farm or business land when they pass it on after death.
If the land is worth more than that, they’ll get 50% relief on anything over £1 million. Instead of paying the full 40% tax, they’ll pay up to 20%.
These landowners will now also be able to spread the payments out over 10 years and won’t pay any interest on it.
Full list of tax changes coming into effect in April
- Employer National Insurance increase
- Council tax rises
- Increases in Scottish income tax thresholds
- Higher stamp duty land tax
- Higher interest on late payments
- New reporting requirements for self-employed
- New reporting requirement for company directors
- Vehicle excise duty extended to EVs
- Changes to capital gains tax reliefs
- Landlords lose access to allowances
- New tax rules for non-doms
- Agricultural property relief extended
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