Here, Which? takes a look at the biggest tax changes coming in 2024, and what they mean for your money.
1. You'll pay less National Insurance
This will result in savings for both employed and self-employed workers under the age of 66 (once you reach 66 you no longer have to pay National Insurance).
Class 1 employee NI contributions
From 6 January, the main rate of Class 1 employee National Insurance contributions (NICs) will be cut from 12% to 10% for workers earning between £12,570 and £50,270. This will benefit 27 million people.
It means someone earning an annual salary of £30,000 will pay £303.35 less in 2023-24 compared to 2022-23. In 2024-25, they will save £261.35 compared to the previous financial year.
Self-employed NI contributions
If you're self-employed, you'll pay Class 2 and Class 4 National Insurance rates on profits above £12,570.
But from April 2024, Class 2 contributions (currently a flat rate of £3.45 a week) will be abolished. This is forecast to benefit 1.9 million people in 2024-25.
Meanwhile, the Class 4 National Insurance rate will fall from 9% to 8% on profits over £12,570, meaning a self-employed worker earning £30,000 a year would save £354.10 in 2024-25 compared to 2023-24.
Find out more:2. Isa rules will become simpler
Under current rules, you can only pay into one of each type of Isa in a single tax year. For example, if you open an instant-access cash Isa in 2023-24, you can't also open a fixed-rate cash Isa.
But this will no longer be the case from April 2024. From that point, savers will be able to easily move between different providers in search of higher returns.
Find out more:3. Capital gains and dividend allowances will be halved
If you own investments outside an Isa or are planning to sell a second home or other valuable asset, you need to be aware of upcoming cuts to tax-free allowances.
Under current rules, you can make gains of up to £6,000 before paying any tax (down from £12,300 in 2022-23). From April 2024, the capital gains tax allowance will be reduced again to just £3,000.
Similarly, the dividend allowance was halved from £2,000 in 2022-23 to £1,000 in 2023-24. It will be further reduced to £500 in April.
Find out more:4. You'll probably pay more council tax
Households should brace themselves for higher council tax bills from April.
For 2023-24, local authorities in England were allowed to raise council tax by 3%, with an additional 2% if they qualify for the social care precept, without the need to hold a local referendum.
Those rules remain unchanged for the next financial year, so you could see your council tax bill increase by up to 5% again in April.
The Scottish government, however, has decided to freeze council tax. It comes after most local authorities in Scotland increased bills by at least 5% last year.
Find out more:5. Tax on alcohol is frozen until summer
Alcohol duties have been frozen until August 2024, following a simplification of the way alcohol is taxed which took effect last summer.
It's possible this could change in the Spring Budget, but for now, the levy on booze will stay the same.
Find out more:source https://www.which.co.uk/news/article/5-tax-changes-you-need-to-know-about-in-2024-aYIN65r6gWjV