Let's delve deeper into these significant financial updates, starting with the changes impacting self-employed
Class 2 National Insurance Abolishment:
Self-employed individuals with profits exceeding £12,570 annually have been accustomed to paying Class 2 national insurance at a flat rate of £3.45 per week. However, come April next this year, this class of national insurance is bidding farewell. This change signifies a substantial boost for sole traders, who can anticipate a significant saving of £179.40 in the 2024/25 tax year.
Class 4 National Insurance Rate Reduction:
In addition to the abolition of Class 2, the Class 4 national insurance rate is also in for a change. The current rate of 9% on profits between £12,570 and £50,270, along with a 2% rate on profits exceeding £50,270, will see a reduction. From April this year, the initial rate of 9% is set to decrease to 8%. This alteration presents an opportunity for sole traders to save up to £377 in the tax year 2024/25.
Limited company owners:
Updates for Limited Company Owners:
Permanent Full Expensing Scheme:
The full expensing scheme, which enables UK companies to deduct 100% of certain equipment costs from their profits in the year of purchase, has been granted permanence. Originally slated to conclude in March 2026, this scheme's permanence ensures an ongoing benefit for businesses. The ability to deduct the complete cost of specific equipment investments from profits can lead to substantial savings, amounting to up to 25p for every £1 spent.
Finally, for those managing employees:
Upcoming Changes for Employers:
National Living Wage and Minimum Wage Increases:
Effective from April this year, the national living wage for employees aged 21 and over will witness a substantial increase of £1.02, raising it to £11.44 per hour. This elevation represents a considerable 9.8% raise, aiming to provide better remuneration for those in this age bracket.
Moreover, the national minimum wage for 18 to 20-year-olds will also undergo a significant upswing, rising by £1.11 to £8.60 per hour, marking a 14.8% increase. Similarly, for 16 to 17-year-olds and apprentices, there will be a substantial hike of £1.12 to £6.40 per hour, translating to a notable 21.2% increase in their minimum wage.
These changes stand poised to bring about substantial financial adjustments for various segments of the workforce and business landscape, enhancing both individual financial prospects and overall economic stability.
Lottie Saunders Bookkeeping and bookkeeping services can help you navigate through these new changes. Why not call us now and get the support you need.