The 2024-25 tax year will see several hundred thousand families benefit from changes to child benefit, with some households being up to £3,000 better off. The government recently announced adjustments to the high income child benefit charge, raising the earnings threshold to £60,000 and halving the rate at which the penalty is charged. This move will benefit around 170,000 families and save nearly 500,000 families an average of £1,300 each in the upcoming tax year.
In addition to the child benefit changes, other financial adjustments will come into effect on 6 April. The main rate of national insurance contributions for employees will decrease from 10% to 8%, resulting in savings for the average worker earning £35,400. The self-employed NICs rate will also fall from 9% to 6% and class 2 self-employed NICs will be abolished.
Furthermore, individuals will now be able to sign up for multiple Isas of the same type each year, as long as they stay within the overall maximum allowance of £20,000. However, the dividend tax allowance has been reduced from £1,000 to £500, and the annual capital gains tax allowance has been cut from £6,000 to £3,000.
These changes aim to provide financial relief to families and individuals, with the government planning to transition to a child benefit system based on household incomes by April 2026. Overall, these adjustments are intended to make the tax system fairer and more beneficial for taxpayers.
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