As of the 6th April 2023 we move into the new 2023/24 tax year. Every year we see changes to thresholds and rates and this tax year is no different. In this article we summarise the changes and explain how they may affect you.
Income Tax Rates 2023/2024
The tax-free personal allowance remains at £12,570 and there is no change to the higher-rate allowance with it remaining at £50,271. Personal allowance rates will remain frozen until 2028. We have summarised the figures in the table below.
| Income Tax | 2022/23 | 2023/24 | Increase | Saving |
| Tax-free allowance | £12,570 | £12,570 | £0 | £0 |
| Higher-rate allowance | £50,271 | £50,271 | £0 | £0 |
Student Loans
The earnings threshold for repayment of student loans has been increased on some but not all plans. Summarised below.
| Student Loans | 2022/23 | 2023/24 |
| Plan 1 loans | £20,195 | £22,015 |
| Plan 2 loans | £27,295 | £27,295 |
| Postgraduate loan | £21,000 | £21,000 |
| Plan 5 loans | N/A | £25,000 |
National minimum and National living wage 2023/24
The national minimum and National living wage has increased by 92p. The increase is summarised below.
| National living wage | 2022/23 | 2023/24 | Increase |
| Hourly minimum for over 23's | £9.50 | £10.42 | 92p |
Inheritance Tax 2023/24
The tax-free threshold remains at £325,000 and is frozen until 2026. The additional rate that applies to property passed directly to a descendant remains at £175,000, meaning the total that can be passed on to direct descendants (including property) remains at £500,000.
| Inheritance Tax | 2022/23 | 2023/24 | Increase | Total (including tax-free threshold) |
| Threshold on property passed directly to descendants | £175,000 | £175,000 | £0 | £500,000 |
Don't forget: Passing on assets to a spouse is tax-free and that spouse can then make use of both allowances, meaning a married couple can increase their total IHT free allowance to £1,000,000.
Lifetime Allowance (Personal Pension) 2023/24
The lifetime allowance on pensions was previously set at £1,073,100. This was the total limit on the amount a retiree could amass in a pension without paying additional tax of up to 55% upon accessing it. However, the Lifetime Allowance was abolished in the 2023 Spring statement meaning that from April 6th 2023, there is no limit to the amount a retiree can amass in a pension without paying tax.
Auto-enrolment
The minimum amount that you need to pay into your workplace's auto-enrolment has remained the same, summarised below.
| Auto-enrolment | 2022/23 | 2023/24 |
| Employee minimum | 5% | 5% |
| Employer contribution | 3% | 3% |
| Total contribution | 8% | 8% |
Dividend Tax Rates 2023/24
There have been changes to the Dividend tax rates for the 2023/24 tax year. See our table below. For more information, read our article How are dividends taxed and what are the rates?
| Dividends | 2022/23 | 2023/24 |
| The tax-free dividend allowance | £2,000 | £1,000 |
| Basic-rate taxpayers % on dividends | 8.75% | 8.75% |
| Higher-rate taxpayers % on dividends | 33.75% | 33.75% |
| Additional-rate taxpayers % on dividends. | 39.35% | 39.35% |
Capital Gains Tax 2023/2024
The annual exemption from capital gains has been reduced by more than 50% and now stands at £6,000. More details can be found in our table below.
| Capital Gains Tax (CGT) | 2022/23 | 2023/24 |
| Annual exemption from capital gains | £12,300 | £6,000 |
| As a basic rate taxpayer | 18% | 18% |
| Gains from other chargeable assets | 10% | 10% |
| As a higher rate taxpayer | 28% | 28% |
| Gains from other chargeable assets | 20% | 20% |
If your assets are jointly owned with another person, you can utilise both your allowances. This can effectively double the amount you can make before any CGT is due. Those that are married or in a civil partnership can transfer assets to each other without any CGT being charged.
If you don't make full use of your CGT allowance in a given tax year, you cannot carry it forward to the next.
From April 2020, anyone making a taxable gain from selling a UK residential property must submit a residential property capital gains return within 30-days and pay any capital gains tax owed.
Corporation Tax 2023/24
Corporation tax has been increased from 19% to 25% for the tax year 2023/24 and this applies to companies with profits above £250,000.
Smaller companies with profits of less than £50,000 will be given a 'Small profits rate' of 19%. Companies with profits between £50,000 and £250,000 will pay the main rate, however, they will receive a Marginal Small Companies Relief (MSCR), applied as a deduction.
VAT Registration Threshold 2023/24
No change. Remains at £85,000
ISA Limits 2023/2024
All ISA limits for 2023/24 remain the same. The limits for all ISA types are summarised below. If you are interested in finding out more about ISAs, then check out our article on the best and cheapest investment ISAs for beginners.
| Types of ISA | 2022/23 | 2023/24 | Difference |
| Cash ISA | £20,000 | £20,000 | No change |
| Stocks and Shares ISA | £20,000 | £20,000 | No change |
| Innovative finance ISA | £20,000 | £20,000 | No change |
| Lifetime ISA | £4,000 | £4,000 | No change |
| Junior ISA | £9,000 | £9,000 | No change |
