What’s new in 2024/25?

With the onset of the new tax year, it’s crucial to stay informed about updates in the changes in tax rates and allowances, opening up avenues for strategic tax planning. WBV, serving Swansea and Neath, is proactively gearing up for the upcoming tax season, ensuring our clients are well-prepared and positioned to capitalise on any emerging tax planning opportunities.

Changes in the Dividend Allowance

The dividend allowance has been reduced to £500 per individual, where this was previously £1,000. This means that those receiving dividends could see their tax bills increase as the amount in which they can receive at the 0% tax rate has been restricted further.

For some shareholders now may be the right time to reconsider planning opportunities such as transferring shares to a spouse to maximise the use of other available allowances.

Drastic changes to Annual Exemption

One of the other changes set to impact many individuals is the decrease in the Annual Exemption for Capital Gains Tax. This allowance is the amount of gains an individual can make in a year that will not be subject to Capital Gains Tax. The Annual Exempt amount has seen drastic cuts in recent years, from £12,300 to £6,000 during the 2023/24 tax year and has been reduced again to £3,000 per individual from 6 April 2024.

Don’t get caught out! Any gains in excess of the Annual Exemption must be reported and subsequent tax paid by the deadline dependent on what type of asset is disposed.

As a reminder, residential property disposals (excluding your principle residence) must be reported and tax paid within 60 days of the date of completion of the sale. For all other assets the reporting deadline is 31st January following the end of the tax year.

As a result of this large decrease in the availability of tax-free gains, you may want to consider your asset portfolio and whether there are any opportunities that can be utilised to decrease your future tax burden.

Relief for Second Homeowners

During the Spring Budget Mr Hunt announced the rate of Capital Gains Tax paid at the higher rate for disposals of residential properties is to be decreased from 6 April 2024 to 24% where this was previously 28%.

This may largely benefit those who are high earners that may be looking to dispose of their rental properties to free up some cash.

How can WBV Chartered Accountants, Swansea and Neath, help?

If you have any queries about how any of the forthcoming changes in tax may affect you in this new tax year, please do no hesitate to get in touch with us at WBV, Swansea or Neath. Our knowledgeable team can assist you in any aspect of tax planning.

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