Tax Rates 23/24 - Davies Tracey - Accountants in Tees Valley
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Tax Rates 23/24

Our Tax Card is now available, created for your use as a quick point of reference throughout the 2023/24 tax year.

It shows all recent changes to rates and allowances affecting business and personal finances.


If you have any queries or require more detailed advice, please call us on 01642 606003.

Our Tax Partner is Ian Kelly, who has pre-empted some questions in his summary of the new tax tear which you can read below.

The new tax year is underway, and if the Budget did one thing, it was to set things up for what surely will have to be a ”give away” Budget next March – albeit there is the intervening Autumn Statement later this year as an interim “taster”.

With the release of our tax card, announcements made in the 2022 Autumn Statement and during the Budget jump out and hit us.

The freezing of allowances, tax rates and thresholds until April 2028 will bring many more people into the 40% higher rate of tax.

The level of income at which the additional higher rate of 45% applies has been reduced to £125,140 which is also the point at which the restriction of the personal allowance for those with income of over £100,000 is complete.

Whilst there are some tax breaks for those making pension contributions, there is no change in the £50,000 earnings threshold at which limit a clawback of Child Benefit takes place.     

For shareholders, the dividend allowance is halved to £1,000 thus increasing the tax due, and the health and social care levy remains in place meaning the dividend tax rates are 8.75% up to the start of the 40% higher rate, 33.75% up to the start of the additional higher rate and then 39.35%.

A bit of a subtle increase, therefore, albeit one that further reduces the differential between income tax and dividend rates. There is still the cashflow advantage that the absence of a National Insurance charge on dividend income brings.

The Capital Gains Tax Annual Exemption has more than halved from £12,300 to £6,000, and with an advance notice that it will fall to £3,000 on 6 April 2024, although the standard and higher rates of CGT remain at 10% and 20% respectively – although for how much longer?

The freezing of the VAT Annual Registration Limit at £85,000 could well, as with the freezing of income tax thresholds, pull more businesses into the charging of VAT, especially if we see an uplift in the economy.

Unsurprisingly, Inheritance Tax thresholds remain frozen at £325,000 for the nil rate band and £175,000 for the residence nil rate band with the IHT rate staying at 40%.

The rate of Corporation Tax became something of a hot potato ahead of the Budget before it came down on the side of the mooted increase from 19% to 25%, partially offset by the retention of the 100% Annual Investment Allowance at its £1,000,000 level.

For those able to use dividends as part of their remuneration package there is still an advantage to be had as is also the case for those with a capital gain who, whilst caught by the reduced Annual Exemption, can still enjoy lower rates than the 20%, 40% and 45% income tax rates.

The new tax year also means the start of another tax return season with the last one having only ended on 31 January. For those clients anticipating a tax refund or wanting to budget for tax payable, the early filing of the return for the year ended 5 April 2023 is going to get the refund issued early doors or provide a longer period to make provision for the tax becoming due on 31 January 2024.

If you would like to talk about the ramifications of the Budget or your accounting and taxation affairs in general, please get in touch with your usual Davies Tracey contact.


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