The new tax year has arrived, bringing with it updated rates, thresholds and a few important reminders for business owners, landlords and individuals alike.
While some rules stay unchanged, others continue to have a growing impact over time, especially with thresholds staying frozen. Understanding what applies to you and your business now will help you plan ahead and avoid surprises later.
Here is a clear, practical guide to the key changes and what they mean for you in the current tax year.
Income Tax, What You Need to Know
Income tax rates remain the same, but the tax thresholds continue to be frozen. This means more people are gradually being pulled into higher tax bands.
Current income tax rates:
• Personal allowance: £12,570
• Basic rate (20%): £12,571 to £50,270
• Higher rate (40%): £50,271 to £125,140
• Additional rate (45%): Over £125,140
The personal allowance is reduced once income exceeds £100,000, meaning some taxpayers face an effective rate of 60 percent in that range.
What this means for you
Even if your income only increases slightly, you may still pay more tax. Planning your income carefully, especially if you are a director or landlord, is becoming increasingly important.
National Insurance, Staying Efficient
National Insurance contributions (NICs) continue to play a key role in how you structure income.
For employees, NICs apply once earnings exceed the primary threshold. For business owners and directors, there may be opportunities to structure income more efficiently.
Key considerations:
• Using a combination of salary and dividends can still be effective.
• Employer NIC costs remain a factor for limited companies.
• Salary levels should be reviewed regularly to ensure efficiency.
A simple review can help ensure you are not paying more than necessary.
Dividends, Still Efficient but Worth Reviewing
Dividends remain a popular way for company directors to extract profits, but allowances have reduced in recent years.
Current dividend allowance:
• £500 tax-free allowance per year
After this, dividends are taxed at the relevant rates depending on your income band.
What this means for directors:
• You may pay more tax on dividends than in previous years
• Planning the timing and amount of dividends is more important
• Reviewing your salary and dividend mix can improve your position
Taking advice before declaring dividends can help you avoid unnecessary tax.
Key Allowances to Use Before They’re Lost
Each tax year comes with allowances that cannot be carried forward if unused. Making use of these can help reduce your tax bill.
Important allowances include:
• Personal allowance
• Dividend allowance
• Capital gains tax annual exemption
• Pension annual allowance
If you are close to any thresholds, small adjustments to income or timing can make a meaningful difference.
What This Means for Small Business Owners
If you run a limited company or operate as a sole trader, the new tax year is a good opportunity to review how your business operates.
Areas to focus on:
• How you pay yourself, salary versus dividends
• Whether your bookkeeping is up to date
• Your expected profits and tax position for the year ahead
• Cash flow planning to cover future tax payments
With thresholds frozen and costs rising, staying on top of your numbers is more important than ever.
What This Means for Landlords
Landlords continue to face a changing tax landscape.
Key considerations:
• Rental income is taxed as part of your overall income.
• Mortgage interest relief remains restricted.
• Record-keeping requirements are increasing, especially with Making Tax Digital on the horizon.
If you own multiple properties or your income is increasing, it is worth reviewing your structure and tax position.
HMRC Changes to Be Aware Of
HMRC continues to move towards a more digital and transparent system.
Key developments:
• Increased focus on accurate reporting
• Expansion of Making Tax Digital over time
• Greater visibility of income through data sharing
Keeping accurate, up-to-date records will make compliance easier and reduce the risk of errors or penalties.
A Good Time to Plan Ahead
The start of the tax year is one of the best times to take control of your finances.
A simple review now can help you:
• Make better decisions throughout the year
• Avoid last-minute pressure in January
• Reduce your overall tax bill legally and efficiently
Good planning is about making informed choices early, rather than reacting later.
We’re Here to Help
Every client’s situation is different, and small changes can often have a big impact.
We support individuals, landlords and business owners across Stevenage and Hertfordshire with clear, practical advice tailored to their circumstances.
If you would like to review your position for the new tax year or to sense-check your plans, get in touch, and we will guide you step by step.
A strong start to the tax year leads to a smoother finish. Let’s get it right from day one.
Want to know more?
You can contact Hammond-Barr accountants on 01438 281281 or via email at [email protected].
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