Tax Changes for the New Year: What You Need to Know

Strategic Insights -

As the new tax year starts, there are a few key changes that you need to be aware of, despite the overall tax landscape remaining relatively unchanged. One significant change is the increase in Capital Gains Tax rates, which affected basic rate taxpayers from October 30, 2024. The rates now stand at 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. Additionally, the new Chancellor's decision to make immediate changes to the Capital Gains Tax rates in the first budget may set a precedent for future changes.

Jeremy Crouch, a solicitor at Anthony Gold, highlights that personal allowances and additional rate thresholds remain unchanged, but this means that increases in pay or taxable benefits are likely to be taxed. The personal tax-free allowance remains at £12,750, with taxable income above that level being taxed at 20%, and anything above £50,270 being taxed at 40%. Those earning more than £125,140 are taxed at 45%.

Key Takeaways:

  • Income tax rates remain unchanged, as do National Insurance payments for employees.
  • Personal allowances and additional rate thresholds are unchanged, which means that increases in pay or taxable benefits are likely to be taxed at higher rates.
  • The personal tax-free allowance remains at £12,750, with taxable income above that level being taxed at 20%, 40%, and 45% for higher earners.
  • The Capital Gains Tax rates have increased for basic rate taxpayers to 18% and for higher and additional rate taxpayers to 24%, from October 30, 2024.
  • The Personal Savings Allowance remains in place, allowing basic rate taxpayers to earn £1,000 of interest on savings before being taxed, and higher rate taxpayers to earn £500.
  • Individuals can still save up to £20,000 in ISAs, which are exempt from income tax.
  • Pension contributions continue to attract tax relief, with the maximum contribution remaining at £60,000.
  • The new flat-rate state pension is now £230.25 a week, which may be taxed if combined with other untaxed income exceeds the personal allowance.
  • Changes to Capital Gains Tax rates are not the only surprise, as the Chancellor has also made changes to Inheritance Tax from April 2026 and April 2027.

Statistics:

  • Income tax rates: 20% up to £50,270, 40% above £50,270, 45% above £125,140.
  • Personal tax-free allowance: £12,750.
  • Capital Gains Tax rates:

+ Basic rate taxpayers: 18% (increased from unknown previous rate).

+ Higher and additional rate taxpayers: 24% (increased from unknown previous rate).

  • Personal Savings Allowance:

+ Basic rate taxpayers: £1,000.

+ Higher rate taxpayers: £500.

  • ISA savings limit: £20,000.
  • Pension contribution limit: £60,000.
  • New flat-rate state pension: £230.25 per week.

Sources:

  • Jeremy Crouch, Anthony Gold Solicitors LLP, The Cottons Centre, 5th Floor - South West, Hays Lane, London SE1 2QG.
  • Anthony Gold website: www.anthonygold.co.uk.
  • Mondaq Ltd, Tel. +44 (0)20 8544 8300, http://www.mondaq.com (originally published 22 April 2025).