The beginning of a new tax year is a uniquely stressful time for businesses, required as they are to reconcile their previous year’s finances – and, indeed, look ahead to the next. Year-end is a comprehensive process for businesses of all sizes, not in the least as a time to re-align with new tax and wage guidance. What follow are some of the key changes you should be aware of in the 2023-24 tax year, especially if you are starting a business with previous guidance in mind.
Increases to NMW and NLW
One of the more impactful changes with regard to business operations comes in the form of changes to the National Minimum and Living Wages respectively. Payroll systems will need to be updated to recognise the roughly-10% increase to hourly rates for minimum wage workers across the board.
In accordance with guidance following the profound impacts of rising inflation on affordability, the government has increased the rate of pay for apprentices and 16-20-year-old minimum-wage workers by 9.7%. 21-22-year-olds are seeing their minimum wage rise by 10.9%, and the National Living Wage – applicable to workers over the age of 23 – is also being increased by 9.7%.
Changes to Income Tax
Adjustments have also been made with regard to Income Tax, albeit only for higher-bound tax brackets. The government has elected to reduce the threshold for the 45% additional-rate Income Tax from £150,000 to £125,140. Meanwhile. Scotland have elected to increase their highest two rates of income tax by 1%, bringing them to 42% and 47%. Other tax bands remain unchanged across the country, with the basic and higher-rate tax thresholds of £12,570 and £50,270 remaining frozen until April 2028.
Changes to National Insurance
National Insurance rates and the adjustment thereof had become a source of indignation in national news cycles in 2022, with the government introducing a Health and Social Care levy amounting to a 1.25 percentage point increase. The 2023/24 tax year has seen this increase officially reversed, returning National Insurance rates to prior levels.
Changes to Work and Pension Entitlements
Changes to State Pension rates were also being watched closely, with the untenable rise in inflation leading to concern that the government would renege on their promise to uphold the State Pension triple-lock. In 2023/24, the government are upholding the triple-lock, with a 10.1% uplift to weekly State Pension payments.
Workers have also seen changes to their entitlements in the workplace, with changes to statutory leave entitling workers to increased maternity, paternity, bereavement and adoption pay – as well as a higher rate of Statutory Sick Pay. SSP is increasing to £109.40 per week; maternity and adoption pay is increasing to 90% of average weekly earnings for at least the first six weeks, then the lesser of 90% of average weekly earnings or £172.48 per week. The latter pay also describes the new rates for paternity, shared parental and bereavement pay.