The new tax year starts on 6 April 2024, just a few days’ time, which brings changes to a range of payroll legislation and rate changes. Here is a quick guide, a reminder and a check list. As this is an overview more detail is available if you reach out to your advo account manager.

Starting with Personal Tax Allowances and Tax Brackets, the personal allowance (sometimes called the tax-free allowance), remains the same as previous tax year, £12,570. Similarly, the threshold for basic, higher and additional rate tax bands in England will not change.

Scottish Tax rates differ with six, not three thresholds, starting at 19% and the highest, 48%, with some thresholds increasing.  There is also a new threshold added between the ‘higher’ and ‘top rates’ called the Advanced Rate.

So, is Income Tax higher in Scotland than in England? The answer will depend on your income. There are more tax bands in the Scottish income tax system than the rest of the UK. For this reason, income tax liabilities for Scotland are slightly lower for people on less than £27,000 per year, but greater for those on higher incomes.

Improvements to the National Insurance regime kick in throughout 2024. There are changes in National Insurance for both employees and the self-employed with changes across classes of NI. From 6 April 2024, Class 1 NICs for employees will be cut from 10% to 8%, this is following the cut from January 2024 where we saw Class 1 employee NI contributions cut from 12% to 10%.

From the beginning of January, a hybrid NI rate applied to directors, but from April, this should match the rate used for employee NI calculations. Essentially meaning the directors’ ‘main rates’ for NI will move back down to match employee rates, the rates used depending on NI category. Some directors may no longer be able to use the main rate at all.

The tax-free Dividend Allowance has been steadily falling and the 2024/25 is no different with the allowance falling from £1,000 to just £500.

The National Minimum Wage (NMW)/ National Living Wage (NLW) rates have changed, as have the age-limits. Although not technically part of the new tax year changes, it might impact how you pay your employees over this new tax year. The National Living Wage will increase to £11.44 for those aged 21+ from 1st April 2024. This differs from the year before, when the full amount was paid when 23 and over.

As with minimum wage, another increase in statutory pay will take effect for statutory maternity and other parental pay and sick pay, as well as other benefits for employees who qualify. (See the above HR summary of changes for more details)

Finally, quickly looking at Pensions; the Chancellor removed lifetime allowance on pensions last April meaning the amount an individual accumulates in their pension pot before paying additional tax is no longer applicable. This is still the case for the 2024/25 tax year.

With the changes in pensions allowances, restrictions on lump sum allowances we would suggest individual pension planning is reviewed. advo works with a number of IFA firms as strategic partners, and so through them, can offer staff presentations and webinars along with one-to-one advice.

If you want to know more about how any changes affect your own organisation, just reach out to your advo account manager.