Time to take stock and evaluate the potential impact of Key Legislative Changes for 2024

Key processes are always changing and new legislation is regularly shaking up the way we all work.  Because of this many aspects within businesses such as payroll, bookkeeping, tax treatments and accounting procedures need to be repeatedly examined, tweaked and updated.  

It is therefore crucial as we approach the 2024/2025 tax year to take stock and evaluate the potential impact of various legislative measures being implemented. To support we’ve summarised some of the key changes taking effect, businesses need to accommodate.

Changes to NICs

In the 2023 Autumn Statement, the Chancellor announced significant changes to the National Insurance contributions (NICs) system.   Starting from 6 January 2024, the government will reduce the main rate of Class 1 employee NICs from 12% to 10%. This change is expected to result in a tax cut for an estimated 27 million working people.

According to the government, an average worker earning £35,400 will receive a tax cut of more than £450 in the fiscal year 2024/25. 

In addition, changes will be made to Class 2 NICs from 6 April 2024. Self-employed workers with profits exceeding £12,570 will no longer be obligated to pay Class 2 NICs.

However, they will retain access to contributory benefits such as the State Pension.

Self-employed workers with profits ranging between £6,725 and £12,570 will maintain access to contributory benefits through a National Insurance credit, without the need to pay NICs. 

Individuals with profits below £6,725 and others who voluntarily pay Class 2 NICs to gain access to contributory benefits will continue to have this option.

Effective from 6 April 2024, the government will reduce the main rate of Class 4 self-employed NICs from 9% to 8%. The government estimates that this cut will benefit approximately two million individuals.

The National Living Wage and National Minimum Wage

The Government accepted the recommendations of the Low Pay Commission and announced increased rates of the National Living Wage (NLW) and the National Minimum Wage (NMW), set to take effect from 1 April 2024. Additionally, from this time, the NLW will be extended to 21 and 22-year-olds. 

The apprenticeship rate applies to apprentices under 19, or those who are 19 and over in the first year of their apprenticeship.

The National Living Wage applies to those aged 21 and over.

Reduction in the Dividend Allowance

The Government also confirmed that, Dividend Allowance will be reduced from £1,000 to £500 starting from 6 April 2024. This reduction is expected to affect an estimated 4.4 million individuals in 2024/2025, with the average loss to those affected being around £155.

Changes to business rates in England

From 1 April 2024, the small business multiplier will be frozen at 49.9p for another year in England. The 75% Retail, Hospitality, and Leisure relief up to a cap of £110,000 per business will be extended for 2024/2025. The standard multiplier will be updated in line with the Consumer Prices Index issued in September.

Merging R&D and SME schemes

As of April 2024 the two separate Research and Development Expenditure Credit (RDEC) and SME schemes will be merged, both to streamline the relief and help control its overall cost. Expenditure incurred in accounting periods beginning on or after 1 April 2024 will be claimed in the merged scheme.

Additional R&D information form (AIF)

Historically, a company makes an R&D claim as part of its corporation tax return (form CT600). From last August, all R&D tax relief claims must be preceded by a compulsory AIF. This AIF provides more detailed information and must be submitted digitally, before any CT600 that contains an R&D claim. HMRC will automatically reject claims within a CT600 where an AIF has not been submitted in advance, making potential claims invalid.  

There are many projects which could make you eligible for a claim, alongside many different forms of R&D tax relief, we can help you find out if you are eligible to make a claim, or provide advice on R&D Tax credit claims. Speak to our specialist tax team, if you would like to discuss in more detail.

Whatever 2024 has in store, we are on hand to help you navigate the changes coming down the line, please get in touch with your local office if you need any help with any of the points mentioned above, or wish to start a conversation with us about your business we look forward to hearing from you.

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