9 March 2023
What to expect in the new Tax Year
Hear from our Legislation Manager, Neil Tonks, as he outlines the key changes that the 2023/24 tax year will bring.
The 5th April 2023 will mark the end of the 2022-23 tax year. This will also mark the start of the 2023-24 tax year, which comes with some key changes that may affect your company's financial planning.
National Living Wage and National Minimum Wage
The cost-of-living crisis is a key issue that is currently being faced by the government, who have confirmed that they are accepting all of the Low Pay Commission’s recommendations. As a result, minimum wage workers will experience another increase in their hourly rates.
The full summary of increases can be seen here:
From the 6th April, the additional-rate (45%) tax threshold will be lowered from £150,000 to £125,140. A publication from the government estimates that 792,000 individuals will be impacted by this change.
For taxpayers in England, Northern Ireland and Wales, the freeze of both personal allowance and the higher-rate (40%) tax threshold has been extended to April 2028. The tax-free personal allowance will remain at £12,570 and the higher rate threshold will remain at £50,270.
This means that over the next 5 years, it is likely that many individuals will either have to start paying tax, or enter into a higher tax bracket, as earnings increase.
Scottish taxpayers fare less well, with the top two rates increasing by 1% to 42% and 47% respectively, increasing the ‘Income Tax gap’ between Scotland and the rest of the UK for many employees.
National Insurance Increase Reversed
The government has scrapped the Health and Social Care Levy, that was introduced in April 2022. NI rates and thresholds for 2023-24 are frozen at those in effect from November 2022, when the 1.25% increase related to the Levy was removed. This means that 28 million people will keep an extra £330 a year, on average, in 2023-24. 920,000 business’ NI liabilities will be reduced by £9,600 on average in 2023-24.
Read more on the government’s cancellation of the Health and Social Care Levy here.
Statutory Leave Rates
An increase in statutory payments has been announced by the government. This means that from April 2023 there will be new rates for statutory maternity, paternity and sick pay, as well as other statutory benefits.
In recent years, there has been a huge increase in remote, or hybrid, working patterns. The government recently announced plans that mean the right to flexible work will soon become a day one right. At the start of their working contract, employees will be able to request flexible work from their employer.
The annual allowances for ISAs will remain the same:
Junior ISAs: £9000
In April, State Pensions are set to increase by 10.1%, due to the reinstatement of the ‘triple lock’ guarantee. Simply put, this means that if you qualify for a full state pension, you will receive £203.85 per week as opposed to £185.15.