The new tax year is bringing with it some significant changes to tax allowances. A summary of them can be found in the table below:
| Allowance | 2022/23 Tax Year | 2023/24 Tax Year | 2024/25 Tax Year |
| Annual Exempt Amount for Capital Gains | £12,300 | £6,000 | £3,000 |
| Dividend Allowance | £2,000 | £1,000 | £500 |
| Additional Rate Income Tax Threshold | £150,000 | £125,140 | £125,140 |
The impact of the above can be explained below:
Annual Exempt Amount – Capital gains tax (CGT) is charged on the profits you make from selling an asset, such as a second property or taxable investments.
The tax-free allowance (known as the Annual Exempt Amount) is £12,300 for 2022-23, but from April this will be dramatically cut to £6,000. From April 2024, it will be reduced again to just £3,000.
Dividend Allowance – From 6 April, the dividend allowance will also be cut from £2,000 to £1,000. From April 2024, it will be reduced to £500. This means if you receive dividends either from taxable investments or via a limited company you will likely pay more tax.
Additional Rate Income Tax – Currently you have to earn over £150,000 before you are taxed at 45%. However the new tax year will bring a reduction of this to £125,140
It’s estimated around 250,000 taxpayers will be pushed into this higher tax band, paying 45% tax on any income above the new limit.
Lowering the additional rate means someone earning £150,000 will pay an extra £1,200 income tax per year.
