What lies ahead for 2024... and ways you could save
Looks at how to reduce your tax burden
LAST year was unrelenting. It’s not just the hideous price rises or the horrible hikes in rent and mortgages, we’ve also been labouring under a miserable tax burden.
You’d have been forgiven for thinking the tax cut announced in the Autumn Statement, which kicks in during January, means we’re off the hook next year.
Unfortunately, there are still plenty of reasons why we’ll likely pay more tax in 2024.
I chatted to Sarah Coles, head of personal finance at Hargreaves Lansdown, about what we can expect in 2024 and ways to help cut the amount you pay.
Tax on pay
The good news is that the cut in National Insurance means on average we’ll pay less tax on our earnings than we did this year, but an awful lot of people will still be worse off
Four million people who weren’t paying any tax at all on their earnings when the thresholds were frozen will be paying it by the time they unfreeze – and if you’re paying this tax for the first time, it doesn’t matter what anyone does to the rate, it still means you’ll pay more tax than you used to.
Council tax
This will rise again in April. Councils will have the right to raise bills by 5% – without holding a referendum – for the second consecutive year.
Given that the Government hasn’t announced plans to give local government any more money to keep up with inflation – it’s likely that a huge number will opt for the biggest possible increase.
VAT
Because VAT is charged as a percentage of what we spend, higher prices tend to mean we’ll automatically pay more VAT next year.
Sin taxes
Alcohol duty has been frozen until August next year, but tobacco duty will rise.
Plus, as the price of alcoholic drinks and cigarettes rise, this will automatically boost the amount we spend on these things without the tax rate.itself changing at all.
Fuel
The big unknown in 2024 is going to be fuel duty.
The Autumn Statement based calculations on an end to the temporary 5p cut – and for fuel duty to rise on top of that. In reality, the Government will be hoping that its finances will start to improve before either of these changes kick in, so it can halt the pain.
Unfortunately, there are no guarantees.
More tax on investments
The dividend allowance falls in April from £1,000 to £500 – after being cut from £2,000 a year earlier.
To add insult to injury, they’ll also be taxed at the higher rates introduced a year earlier. Meanwhile, the capital gains tax allowance will be halved to £3,000 – down from £12,300 two years earlier.
It means more tax for anyone holding investments outside things like ISAs and pensions, once they breach the threshold.