The new tax year started on 6 April 2024; this is a good time for businesses to prepare for the year ahead. Several changes were announced in the Spring Budget, which you need to consider.

To read the full summary, click here – Summary of the Spring Budget 2024.

In this article, we are listing a few tax changes that may impact you and your business:

1. Corporation tax rises last year have now fully kicked in. From April 2024, corporation tax increased from 19% to 25%. This means there is an increase in tax liabilities, i.e., the higher the profits, the more tax you must pay. This reduces your net profit, resulting in less income for shareholders and less investment back into the business.

2. The VAT threshold has increased to £90k. The VAT threshold is measured on the turnover of the previous 12 months, which is the total amount of revenue generated by your business that is not exempt from VAT. All businesses above this threshold are legally required to become VAT-registered.

3. Dividend 0% band is now £500 a year. This means you can earn up to £500 for 2024/25 before you pay any Income Tax on your dividends. The rates of tax you pay on dividends are lower than the income tax rates. Therefore, dividends are tax-efficient for limited company directors. 

4. Many workplaces provide salary sacrifice schemes, which can reduce the cost of purchasing an electric vehicle. To support this, company car tax is favourable for electric vehicles at only 2%. The government has confirmed that company car tax for EVs will increase by 1% each year from 2025 to a total of 5% in April 2028. Taxation of other company cars will remain high.

5. Many businesses are still struggling to understand reverse-charge VAT. The VAT domestic reverse charge must be used for most supplies of building and construction services. The charge applies to standard and reduced rate VAT services for businesses registered for VAT in the UK and those reported within the Construction Industry Scheme. If you are struggling with this, we can advise you.

6. The High-Income Child Benefit Charge (HICBC) has increased from £50,000 to £60,000 from April 2024.

Which business structure is best for you? With all the changes in tax, this may be an excellent time to evaluate whether it is better to operate as a sole trader or as a Limited Company. Next month we will give you some pros and cons of each, in the meantime we are happy to discuss this with you if you are unsure.

If you would like any advice on tax mitigation strategies, then contact us directly on 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it.