Yearend Checklist - 2024-5 Tax Year

We are fast approaching the end of the 2024-25 tax year (5 April 2025), so now is a good time to review key tax thresholds and allowances to maximise available tax savings. This checklist provides a summary of the key areas to consider.

Shareholders should ensure they take their tax-free dividend allowance before 5 April 2025. For the 2024/25 tax year, this allowance is £500, down from £1,000 in 2023/24.

Don’t forget your certificate! It’s important that your dividends are supported by proper dividend certificates – you can download our template here.

The tax-free capital gains allowance has been halved to £3,000 for 2024/25.

Capital Gains Tax (CGT) rates for the 2024/25 tax year are split into two periods:

1. Disposals between 6 April 2024 – 29 October 2024:
• 10% for basic rate taxpayers
• 20% for higher and additional rate taxpayers
• 18% for residential property gains (basic rate taxpayers)
• 28% for residential property gains (higher and additional rate taxpayers)
2. Disposals from 30 October 2024 onwards:
• 18% for basic rate taxpayers
• 24% for higher and additional rate taxpayers
• 18% for residential property gains (basic rate taxpayers)
• 24% for residential property gains (higher and additional rate taxpayers)

The new rates from 30 October 2024 will continue into the 2025/26 tax year.

Previously known as Entrepreneurs’ Relief, BADR allows qualifying business asset disposals to be taxed at a reduced rate. However, the rate is increasing:

• Until 5 April 2025: Gains taxed at 10%, up to a £1 million lifetime limit.
• From 6 April 2025: Rate increases to 14%, lifetime limit remains £1 million.
• From 6 April 2026: Rate increases further to 18%, lifetime limit still £1 million.

Your total taxable income includes salary, dividends, rent, and taxable benefits.

• Income over £50,270: Subject to the higher rate of income tax (40%) and dividend tax (33.75%).
• Income over £60,000: Triggers the High-Income Child Benefit Charge. For every £200 earned over £60,000, 1% of Child Benefit is clawed back, meaning those earning £80,000+ lose all entitlement.
• Income over £100,000: For every £2 earned over this threshold, you lose £1 of your tax-free personal allowance (£12,570). This creates an effective 60% tax rate on income between £100,000 and £125,140.

⚠️ Important: If either parent earns over £100,000, you also lose eligibility for tax-free childcare, which provides up to £2,000 per child (£4,000 for a disabled child).

💡 Tax Tip: Subscribe to our newsletter or follow me on LinkedIn for an upcoming article on how founders can tax-efficiently pay themselves £125k per year.

The Annual Allowance (maximum pension contribution eligible for tax relief) is £60,000 for 2024/25.

However, your allowance may be reduced if:

• Your adjusted income exceeds £260,000 (tapering applies, reducing the allowance by £1 for every £2 over this threshold, down to a minimum of £10,000).
• You have accessed your pension flexibly, triggering the Money Purchase Annual Allowance (MPAA) of £10,000.

Good news: You can carry forward unused Annual Allowance from the previous three tax years if you were part of a registered pension scheme.

Lifetime Allowance (LTA) Update:

• The LTA charge was abolished from 6 April 2023, removing penalties for exceeding pension limits.
• However, tax-free lump sums remain capped at £268,275 unless specific protections apply.

Pension contributions are highly tax-efficient, but they involve complex rules. Professional advice is recommended.

• Company donations are allowable expenses.
• Personal donations fall under Gift Aid, allowing higher rate taxpayers to claim additional tax relief.

• Personal Savings Allowance (PSA): £1,000 for basic rate taxpayers, £500 for higher rate taxpayers (zero for additional rate taxpayers).
• If you’ve loaned money to your company, you can charge interest (up to 8% per annum) tax-free within your PSA limit.