Frozen or reduced tax allowances and rising income – from interest, dividends, or pensions – all provide a recipe for higher tax bills and more taxpayers.
An increasing number of people who hadn’t been liable for tax before are discovering that they are now taxpayers, despite their only income in 2023–2024 coming from a State Pension (whether new or old).
Those who are affected by such tax changes should receive a simple assessment tax bill from HMRC (HM Revenue & Customs), as the DWP (Department of Work & Pensions) provides payment details.
Have you underpaid tax for 2023–2024?
It’s possible that your tax position may have changed throughout the last year or so without you noticing. Here are the factors that may have affected your liabilities:
|
Tax Year |
2021–2022 |
2022–2023 |
2023–2024 |
|
Personal Allowance |
£12,570 |
£12,570 |
£12,570 |
|
Dividend Allowance |
£2,000 |
£1,000 |
£500 |
|
Personal Savings Allowance |
£1,000 max* |
£1,000 max* |
£1,000 max* |
|
Bank of England Base Rate |
Close to 0% |
Average 4.5% |
5.25% (May 2024) |
|
New State Pension |
£9,339 |
£10,600 |
£11,502 |
*For nil rate and basic rate taxpayers. The savings allowance for higher rate taxpayers is £500, and nil for additional rate taxpayers.
The situation is similar for Capital Gains Tax (CGT), as the annual exempt amount fell from £12,300 in 2021–2022 to £6,000 in 2023–2024, now dropping to just £3,000.
Do you need to contact HMRC?
If you don’t already submit self-assessment tax returns, it’s your responsibility to notify HMRC if your interest exceeds your personal savings allowance or your dividends exceed the dividend allowance. You can let HMRC know about a change in circumstances that affects your tax liability through your online tax account. Though you probably won’t have to, you can check if you need to send a self-assessment tax return online.
If you don’t tell HMRC about your interest and dividends, building societies and banks will automatically report this information to the tax agency, so you could end up receiving warnings or fines from HMRC on top of owing tax.
Careful planning can help with sidestepping HMRC’s traps, but you may need professional tax planning advice from experts like our accountants in Barnsley.
Call gbac on 01226 298 298 or email info@gbac.co.uk
and our team will be happy to help you liaise with HMRC and sort out your tax affairs.