Interest rate cuts are coming down soon

The Bank of England boss Andrew Bailey has indicated interest rate cuts are coming down soon after the rate was left unchanged at 5.25% last month, the highest for 16 years. The Bank still needed to see inflation fall further, but last month’s fall to 3.4% was encouraging. He said rate cuts could come before inflation hits its 2% target.

Following complaints made by Santander and others, the Nationwide advert featuring actor Dominic West that claimed the building society was not closing branches has been banned. The Advertising Standards Authority said in fact that Nationwide had been closing branches. It was also not clear enough that a Nationwide promise not to close any more would end in 2026.

Across the pond there was good news and bad news for The Donald. The good news was his massive bail bond in his civil fraud case of $464million was reduced to $175million, which he was able to post. However, after a stellar debut on Wall Street a week ago, shares in his Truth Social media empire tanked by 20% as losses were announced. The value of his shares is now down to a paltry $7.0billion (£5.6billion)!

With it being the end of the old tax year today and tomorrow will see the start of the 2024/25 tax year, I will remind you of some of the key changes, some of which came in from Monday.

NATIONAL LIVING WAGE (NLW) INCREASES

By way of a reminder from Monday the NLW increased by 9.8% on 1 April. The main wage rate has risen from £10.42 to £11.44 an hour and will now apply to workers over 21 rather than over 23.

The minimum wage for 18 to 20 year olds will increase from £7.49 to £8.60 an hour. Under 18s and apprentices will also get an above-inflation rise, with hourly pay going up by more than 20%, from £5.28 to £6.40 an hour. Please remember despite apprenticeships lasting more than one year, the apprentice NLW rate only lasts for one year.

When setting the minimum wage, the Government is guided by proposals from the Low Pay Commission. The rising cost of living prompted the independent commission to recommend a bigger rise in the minimum wage. And with this being an election year it would have been pretty dumb not to follow the recommendations.

NATIONAL INSURANCE RATES REDUCED

From 6 April 2024, the 2% cut in employee national insurance contributions will come into effect. Employees will now be deducted 8%, rather than 10%, on monthly earnings between £1,048 and £4,189. A 2% deduction on earnings above this amount continues to apply. There is no change to the rate of employers’ national insurance, which stays at 13.8% on monthly earnings above £758.

Self-employed individuals with profits of more than £12,570 a year pay two types of NIC: Class 2 and Class 4. Two key changes come into effect from 6 April 2024, as previously announced in Autumn Statement 2023 and further extended in this Budget: The main rate of Class 4 NICs will be cut from 9% to 6% in 2024/25. Class 4 NICs will continue to be calculated at 2% on profits over £50,270. In addition, Class 2 NICs will effectively be abolished, saving £179.40 per annum.

BUSINESS RATES FROZEN

The small business multiplier for business rates will also be frozen for a fourth consecutive year, protecting over a million ratepayers from a 6.6% increase in their bills. The measure is part of the £4.3billion business rates support package announced at Autumn Statement that includes the 12 month extension of the 75% relief for 230,000 retail, hospitality and leisure (RHL) businesses. This does not extend to Wales where the devolved Government has reduced the support to 40% rates relief.

VAT THRESHOLD CHANGE

The VAT threshold is raised from £85,000 to £90,000 from 1 April, the first increase in 7 years. The move will potentially take some 28,000 small businesses out of VAT. The level at which a business can apply for de-registration will increase from £83,000 up to £88,000.

CAPITAL GAINS TAX

Landlords holding property in a limited company or personally will be able to take advantage of a reduced 24% rate of capital gains tax, down on the standard 28% rate from 6 April. The reduction will only apply to properties that exchange on or after 6 April 2024, and not properties that exchange before this time but complete afterwards.

The lower rate of CGT for residential properties remains unchanged at 18%, as does the rates for non-residential properties at 10% for gains within the basic rate band and 20% above this level. Finally, the annual exemption before tax is payable has fallen from £6,000 to just £3,000.

REASEARCH & DEVELOPMENT

New rules on Research and Development (R&D) tax relief are also now in force, which saw the merger of the existing Small to Medium Enterprises and large business R&D tax into a single scheme, apart from intensive R&D which is now drawn into a completely new scheme.

I would remind you of one of my articles earlier, beware this tax relief has become the latest target for so called tax experts with a number of possible scammers out there. We have worked with a reputable R&D company for more than 10 years, so please contact us if you think you might be able to claim.

AND FINALLY ……….

Today, as we look forward to a summer getaway, you may want to avoid this hotel as Manuel is in charge. To view please click here.