New Tax Year 2023–24: Key Changes You Need To Know
With the UK new tax year (2023 to 2024), there are some changes that individuals and businesses need to be aware of with regard to certain tax changes and important dates.
In this article, we will provide financial planning tips that can help you avoid making mistakes on your upcoming taxes and help you stay up to date on all UK tax laws.
- The new tax year (2023–24) comes with changes to previous tax rules and important dates throughout the UK.
- Corporation taxes, dividend allowances, employment allowances, minimum wages, and more have changed.
- Reviewing tax changes and thresholds is important for small business owners to ensure they stay tax-compliant.
- Important Changes For The New Tax Year 2023-24
- 2023–24 UK Tax Year Calendar by Month
- FreshBooks Can Help You With Your Taxes
Important Changes For The New Tax Year 2023-24
In the upcoming UK new tax year (2023–2024), from April 2023 to April 2024, certain tax rate changes have been put into place. Tax rates, minimum wage rates, and National Insurance contribution requirements have all changed in the new tax year.
The following are some of the biggest changes that are likely to affect individuals and small business owners during the upcoming tax season.
1. Corporation Tax
Starting in April 2023, businesses that report profits of up to £50,000 remain paying the “small profits rate” of 19%, whereas those at £250,001 and above will pay a much higher rate of 25% in corporation tax.
The businesses that fall between those two numbers (those with profits that are between £50,001 and £250,000) will be given “marginal tax reliefs,” with a gradual increase in tax rates, paying the 19% rate for all earnings under £50,000, and then a higher rate of 26.5% for the rest.
For example, if a business were to report a profit of £80,000, it would pay 19% tax on the first £50,000 and then 26.5% on the rest, up to £250,000.
2. Dividend Allowance
The tax-free personal dividend allowance for the tax year 2023 to 2024 has changed significantly. It has been reduced by half to £1,000, where it used to be £2,000. This means that if an individual taxpayer’s dividend income is over £1,000, you will have to pay tax on the excess (the amount you earn that goes over the marginal rate).
If your dividend allowance falls within your personal allowance of £1,000, you do not have to pay taxes on that income.
Starting 6 April 2024, this will be reduced to £500.
3. Employment Allowance
Employment allowance is a measure that was put into place to help small businesses handle the costs of employment. It allows eligible employers to reduce their National Insurance Liability (the amount that employers have to pay for Employers’ Class 1 National Insurance when payroll is run).
The amount has increased from £4,000 to £5,000, helping smaller firms and individuals save money on the annual amount that shows up on their NI bill.
4. Income Tax
Taxpayers who have earned less than £12,570 of taxable income will not pay any income tax. The threshold levels for England, Wales, and Northern Ireland are as follows:
- The basic rate (for those earning £12,570 to £50,270) is charged at income tax rates of 20%
- The higher rate (£50,271 to £125,140) is charged at 40%
- The additional rate (any income over £125,140) is charged at 45%
Scotland sets its own income tax bands for Scottish taxpayers. For 2023–2024, they are as follows:
- The personal allowance encompasses any earnings up to £12,570
- The starter rate (£12,571 to £14,732) is charged at 19%
- The basic rate (£14,733 to £25,688) is charged at 20%
- The intermediate rate (£25,689 to £43,662) is charged at 21%
- The higher rate (£43,663 to £125,140) is charged at 42%
- The top rate (any income over £125,140) is charged at 47%
5. National Insurance Contributions (NICs)
National insurance is the second largest source of money for the UK government. NI is used as state benefits for times when individuals need assistance, like when they are ill, in retirement, or unemployed.
The amount of National Insurance you must pay is a tax charge determined by a fixed percentage of your earnings that is deducted from your wages. The charges are as follows:
- You do not pay NI on the first £12,571 earned in the year
- Earnings from £12,570 to £50,270 are charged at 12%
- 2% is charged on any earnings above that
National insurance thresholds are currently frozen and will remain that way until 2028.
6. National Minimum Wage
As of April 1, 2023, the UK wage minimum for an adult aged 23 and older has changed to an hourly rate of £10.42.
The rate for first-year apprentices and individuals aged 16 to 17 is £5.28, for those aged 18 to 20, it is £7.49 and for those aged 21 to 22, it is £10.18.
This is, by law, the lowest hourly rate an employee may be paid throughout the UK, including casual workers, part-time employees, and temporary workers. Self-employed individuals and company directors are not entitled to the National Minimum Wage.
7. Statutory Pay for Employees
Like the National Minimum Wage, statutory rates for employees have changed, increasing at the same rate, from a minimum of £9.50 per hour to £10.42 per hour (although the individual’s work contract may allow them more than that).
When employees are eligible for statutory sick pay and are too ill to work for more than 3 days, they will receive up to 28 days of pay at a minimum of £109.40 per week. The first 3 days may be unpaid, depending on the work contract.
Statutory pay is also provided at varying rates per week to individuals who are on statutory maternity, paternity, shared parental, or paid adoption leave or are away from work due to bereavement.
If you have a small business, are an independent contractor, or a taxpayer who wants to get the most out of tax time in the new tax year (2023 UK), FreshBooks accounting software can make tax preparation easier for you. See the video below to learn more.
2023–24 UK Tax Year Calendar by Month
The following is the schedule of important dates for the 2023 new tax year. It is important to file your taxes and make payments on time to stay in good standing with the HMRC.
|2023||19th September||Deadline for payment of PAYE and NICs etc, to HMRC’s Accounts Office by non-electronic methods|
|2023||22nd September||Deadline for online payment of PAYE and NICs etc, to HMRC’s Accounts Office|
|2023||30th September||VAT tax return deadline|
|2023||5th October||Deadline to register with the HMRC if you became self-employed or started receiving income from property|
|2023||19th October||Deadline for payment of PAYE and NICs etc., to HMRC’s Accounts Office by non-electronic methods|
|2023||22nd October||Deadline for online payment of PAYE and NICs etc., to HMRC’s Accounts Office|
|2023||31st October||Deadline for paper Self Assessment returns for 2022/23 tax year|
|2023||2nd November||P46 (car) – company car changes in the period 6th July – 5th October|
|2023||19th November||Deadline for payment of PAYE and NICs etc., to HMRC’s Accounts Office by non-electronic methods|
|2023||22nd November||Deadline for online payment of PAYE and NICs etc., to HMRC’s Accounts Office|
|2023||19th December||Deadline for payment of PAYE and NICs etc. to HMRC’s Accounts Office by non-electronic methods|
|2023||22nd December||Deadline for online payment of PAYE and NICs etc. to HMRC’s Accounts Office|
|2023||30th December||Deadline for online submission of Self Assessment tax returns for the year ending 5th April 2022 for HMRC to collect employment or pension income tax through PAYE tax codes if less than £3,000 is owed|
|2023||31st December||Deadline for filing your company’s annual accounts if you have a limited company with an accounting year end of 31st March|
|2024||19th January||Deadline for payment of PAYE and NICs etc., to HMRC’s Accounts Office by non-electronic methods|
|2024||22nd January||Deadline for online payment of PAYE and NICs etc., to HMRC’s Accounts Office|
|2024||31st January||Standard filing deadline for online returns and payment of tax owed, including first payment on account. For taxable trusts, this is the deadline for the annual update/ confirmation of the details held on the HMRC Trust Register|
HMRC must receive a paper tax return by 31st January if you are a trustee of a registered pension scheme or a non-resident company. You cannot send a return online
|2024||2nd February||P46 (car) – company car changes in the period 6th October – 5th January|
|2024||19th February||Deadline for payment of PAYE and NICs etc., to HMRC’s Accounts Office by non-electronic methods|
|2024||22nd February||Deadline for online payment of PAYE and NICs etc., to HMRC’s Accounts Office|
|2024||19th March||Deadline for payment of PAYE and NICs etc., to HMRC’s Accounts Office by non-electronic methods|
|2024||22nd March||Deadline for online payment of PAYE and NICs etc., to HMRC’s Accounts Office|
|End of the 2023 24 tax year|
FreshBooks Can Help You With Your Taxes
FreshBooks is powerful accounting software and a valuable tool that can help you streamline your tax-related tasks, keep you organised, improve your financial management, and help you to navigate the complexities of the new tax year (2023/24).
Tax time can be stress-free when you use FreshBooks. Try FreshBooks free to find out how easy it can be to stay up to date with important information, maximise your deductions, and make sure you stay in good standing with the HMRC.
About the author
Levon Kokhlikyan is a Finance Manager and accountant with 18 years of experience in managerial accounting and consolidations. He has a proven track record of success in cost accounting, analyzing financial data, and implementing effective processes. Levon holds an ACCA accreditation and a bachelor’s degree in social science from Yerevan State University. Catch up with him on LinkedIn: https://www.linkedin.com/in/levon-kokhlikyan-34281398/