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Financial Planning

January 2024

Welcome to the latest bulletin in our series which we publish every 4 months. These bulletins cover topical subjects around taxation and financial planning and provide tips on how the adverse effects of tax changes may be mitigated.

Please note that references to taxation concern the taxation of residents of England, Wales and Northern Ireland unless otherwise specified. Residents of Scotland are taxed under a different regime on their non-savings, non-dividend income (which includes income from employment, self-employed profits and rental income from property).

National Insurance contribution 

Rates reduced 

The Autumn Statement on 22 November 2023 introduced reductions in National Insurance (NI) contribution rates among the 110 measures announced.


From 6 January 2024, the Class 1 employee NI contribution rate drops from 12% to 10% of earnings between £12,570 and £50,270 p.a.


From 6 April 2024, the self-employed Class 2 contributions of £3.45 per week no longer need to be paid (but can be paid voluntarily by those building an NI contribution history) and the Class 4 contribution rate is reduced from 9% to 8% for profits between £12,570 and £50,270 p.a. Class 3 voluntary contributions remain £17.45 per week.


The reduction in Class 1 employee rates give an employee earning £20,000 p.a. a saving of £148.60 in 2024-25 when compared to 2023-24 and an employee earning over £50,2270 p.a. a saving of £754.


Similarly, a self-employed worker with profits of £20,000 p.a. will save £253.70 and £556.40 with profits of over £50,270.

Natonal Insurance contribution

Changes to income tests

For self-assessment tax returns

The income test above which taxpayers are required to submit a self-assessment tax return has increased to £150,000 for the 2023-24 tax year (previously, £100,000). HMRC has also announced that this test will be abolished for the 2024-25 tax year. However, this is only one of the tests that HMRC uses to determine when a self-assessment tax return is required so its abolition may not affect many taxpayers.


A self-assessment tax return should be submitted by those who meet any of the following criteria:


  • HMRC has issued a notice to complete a self-assessment tax return;

  • Self-employed income exceeds £1,000;

  • Gross income from savings and investments exceeds £10,000;

  • Income is received from a trust or estate;

  • Employment expenses of more than £2,500 are claimed;

  • The taxpayer is subject to the High Income Child Benefit (HICB) charge; and/ or

  • The taxpayer has realised capital gains in excess of the capital gains tax annual exempt amount or the proceeds of disposals exceed £50,000.


An online tool is available from HMRC to help determine whether a self-assessment tax return needs to be submitted.


Taxpayers should be aware that it is their responsibility to account to HMRC for any tax that may be due. Those who pay tax under PAYE are generally only assessed for tax on employment income. While tax codes may be adjusted to reflect non-employment income, adjustments may be based on data from previous tax years and may not accurately reflect the tax due on such other income


Image by Priscilla Du Preez 🇨🇦

Digital platforms

To report income from regular sellers

From 1 January 2024, digital platforms are required to report the income exceeding €2,000 (£1,735) per year made by sellers with 30 or more transactions. This information is shared between the tax authorities of countries that have signed up to the Organisation for Economic Cooperation and Development (OECD) tax rules.


Such digital platforms include not only ‘big’ players, such as eBay, Vinted and Airbnb but also other platforms providing goods and services including taxi hire, food delivery, freelance work, short-term and holiday lets and even renting out a driveway for parking.


It is expected that up to 5 million individuals may be impacted by these changes. Whilst many may see the income derived from such activities as a ‘side hustle’, they may need to now determine whether their activities constitute a trade for tax purposes. It is important to note that these activities are not confined to the UK but across the OECD. Most UK residents are subject to UK tax on worldwide income and gains (although credit may be given for foreign tax that has been paid).


This development is another example of the volume of information reported to, and shared by, tax authorities and forms part of a global effort to prevent tax evasion. Individuals who may be uncertain about their tax status should consider seeking professional advice. It is also important to keep accurate records of transactions, even where a tax liability may not arise, in case HMRC asks for them. 

Digial platforms

Company car

Advisory fuel rates

HMRC has issued updated advisory fuel rates for employees using a company car. These rates are used to either reimburse employees, who pay for their own fuel, for business mileage in the company car or to calculate the repayment that employees need to make to cover the cost of private mileage in the company car when the employer meets all fuel costs.


Provided that the rate paid does not exceed the advisory rates, there will be no taxable profit and no Class 1A National Insurance contributions to pay.


From 1 December 2023, until further notice, the advisory fuel rates per mile are:

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Hybrid cars are treated as petrol or diesel cars, as appropriate.

Electric cars  9p

Company car

State pension boost

For those looking after children

Whilst it is well known that a parent who is out of work whilst looking after their child or children can receive National Insurance (NI) credits that count towards their State pension entitlement, it is also possible for other family members to receive the credits if they have helped to care for the same children.


Since 2010, a National Insurance credit has been awarded automatically for any full financial year that a parent has claimed Child Benefit for a child aged under 12. The credit is awarded whether or not the parent is in work. If the parent was working and paying National Insurance contributions during that year, the credit is effectively ‘spare’ as the NI contributions paid during the year will themselves count towards the State pension entitlement.


This spare credit can be transferred to another family member who helped look after the child during that year, provided they are aged under State pension age in that year (and were not paying NI contributions themself). The credit can only be transferred to one family member, even if several members helped look after the child. Claims can also be backdated to financial years from 2011.  To claim, the person who looked after the child during the financial year(s) for which the credits are to be claimed completes an application form which is then signed by the parent to confirm that they are happy for the credit to be transferred before the form is sent to HMRC.


Each year’s credit claimed is worth 1/35th of the State pension, so, based on the full single tier State pension of £221.20 per week in 2024-25, a year’s credit can be worth up to £328.64 p.a. additional State pension for a family member without a full National Insurance contribution history. If a claim is made for each year from 2011-12 to 2024-25, the individual’s state pension entitlement could be boosted by up to £4,600 p.a. It should be noted that a claim for a particular financial year cannot be made until after the 31 October following the end of the relevant financial year.

State pension boost


If the working parent claiming Child Benefit or their partner has adjusted net income in excess of £60,000 p.a. for any financial years from 6 April 2013 (when the High Income Child Benefit (HICB) charge was introduced), they may be contemplating not claiming Child Benefit to avoid the HICB charge. In such cases, the National Insurance credit, but not the Child Benefit payments, should be claimed for that year to allow the credit to be transferred. There is a tick box on the Child Benefit form that allows this choice.

Flower Petals


Updates the CEST tool

HMRC released a rare update to the Checking Employment Status for Tax (CEST) tool on 2 October 2023. This tool is used by employers, recruitment agencies, freelancers and contractors to check whether an engagement may be caught by the off payroll working (IR35) rules.


The CEST tool has received significant criticism since its roll-out in 2017 but has been used millions of times. It is estimated that the tool is unable to provide an answer in around 21% of cases.


The tool is now hosted on HMRC’s Ocelot platform which allows rapid production of interactive guidance. It is expected that a further update, involving updates to the questions that CEST uses, will be issued in due course.

Image by Yousef Espanioly


'Loophole' to be closed and other changes

From 6 April 2024, the minimum age to open an ‘adult’ ISA will be 18 years. This closes a loophole where, currently, 16 and 17 year olds are able to contribute up to £9,000 to a Junior ISA and up to £20,000 to an adult Cash ISA each tax year. 


ISA subscription allowances otherwise remain unchanged in 2024-25 with an individual (adult) overall subscription allowance of £20,000 p.a. (including up to £4,000 p.a. to a Lifetime ISA for those eligible) and £9,000 to a Junior ISA.


Other changes taking effect from 6 April 2024 include:


  • Investors and savers will be able to make subscriptions to multiple ISAs of each type, subject to the overall subscription allowances;

  • partial transfers between providers will be allowed;

  • certain fractional shares will be allowed to be held (this will allow fractions of some high value shares to be purchased within an ISA); and

  • Innovative Finance ISAs can hold long-term asset funds and open-ended property funds.


Rates of tax

The Scottish government published their Budget for 2024-25 on 19 December 2023. This included some increases to income taxation for those with higher earnings, profits and/or property income (Scottish rates of tax only apply to the non-savings, non-dividend income of an individual deemed to be resident in Scotland).


From 6 April 2024, the following rates of income tax apply a Scottish resident’s non-savings, non-dividend income:

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Rates of tax 

The Welsh government published its draft Budget for 2024-25 on 19 December 2023. This does not propose any changes to Welsh income tax rates for non-savings, non-dividend income so these will continue to be aligned with the rates for England.


A second, supplementary Budget for 2024-25 is due to be laid before the Senedd in February 2024.


Abolition of the pensions lifetime allowance 


The abolition of the lifetime allowance (LTA) with effect from 6 April 2024 was confirmed in the Autumn Statement. During the 2023-24 tax year, the lifetime allowance charge has been set at 0%. 


The LTA will be replaced by two new allowances:

  • The ‘Lump Sum Allowance’ which will be set at £268,275 (25% of the current LTA of £1,073,100) and limits the amount of pension commencement lump sum (PCLS) that can be taken. A higher figure will apply where the member has made an election for a protected PCLS; and

  • The ‘Lump Sum and Death Benefit Allowance’ set at £1,073,100 which incorporates both tax-free lump sums taken during the member’s lifetime and lump sums paid on death. This allowance limits the amounts that can be paid as tax-free lump sums to beneficiaries after the member’s death.


Each allowance will be reduced if the member has already used some of their lifetime allowance before 6 April 2024.


A third allowance, the ‘Overseas Transfer Allowance’, also set at £1,073,100, measures the value of pension benefits that are transferred to a qualifying overseas pension scheme. If allowances are exceeded, an excess is taxed in the same way as income.Any death benefits that re paid as income where the member died under age 75 will continue to be tax-free.


Capital gains tax


The capital gains tax annual exempt amount for individuals reduces from £6,000 to £3,000 on 6 April 2024. The annual exempt amount available for trustees reduces to £1,500 and is apportioned between settlements if the settlor had created more than one settlement (subject to a de minimis limit of £300 per settlement).


In 2024-25, investors will need to report capital gains to HMRC if gains exceed the annual exempt amount or if the proceeds from disposals during the year exceed £50,000.


As a reminder, if a capital gain arises on the disposal of residential property, any gain should be reported, and a payment made on account for any capital gains tax due, to HMRC within 60 days of the date of disposal.




Those considering disposing of assets which will result in a taxable capital gain should consider, where possible, disposing of part of the asset before 5 April 2024 to utilise any unused CGT annual exempt amount for 2023-24 and disposing of part after 6 April 2024 to utilise any available CGT annual exempt amount for 2024-25. Married couples may also wish to consider transferring all or part of the asset to a spouse before disposal to make use of that spouse’s available CGT annual exempt amount (and potentially, lower CGT rate). For this tax treatment to apply, any transfer between spouses should be unconditional.

Image by Kelly Sikkema

Tax advice

Don't get caught out

HMRC has started a campaign to help taxpayers identify tax advice schemes which may not be quite what they seem. The campaign provides practical advice and, where appropriate, support and guidance on how to get out of a scheme.


The campaign focuses on Stop, Challenge, Protect:

  • Stop - take time to check what you are signing up for;

  • Challenge – if it looks too good to be true, it almost certainly is; and

  • Protect yourself and others - HMRC is here to help so report tax avoidance schemes to us.


There is also specific advice for contractors, agency workers and those working through umbrella companies and for those who may be eligible to claim tax relief on expenses.


The marriage allowance

The key details

The marriage allowance lets a married couple, where one partner may be a non-taxpayer and the other a basic rate taxpayer, elect to transfer 10% of the personal allowance from the non-taxpayer to the basic rate taxpayer, thereby saving the basic rate taxpayer some income tax.


In 2023-24 and 2024-25, the personal allowance is £12,570 and the amount that can be transferred by the non-taxpaying spouse to their basic rate taxpaying partner is £1,260, giving an income tax saving of up to £252. The personal allowance and marriage allowance are frozen at £12,570 and £1,260 respectively until April 2028.


It is estimated that around 2.1 million couples, of which around one third were pensioner couples, benefited from the marriage allowance in 2020-21. Once an election has been made for the marriage allowance, it continues each year until revoked.


For the current maximum income tax saving of £252 to be available, the non-taxpaying spouse must have income of less than £11,310 p.a. (90% of the personal allowance) to avoid the transferred allowance then causing the transferring spouse then incurring an income tax liability (their personal allowance is reduced by the transferred amount) and the receiving spouse must have income of at least £13,830 (the personal allowance plus the transferred amount).


However, the full State pension in 2024-25 will be £11,502 p.a. (increased from £10,600 p.a. in 2023-24). Coupled with increased interest rates on savings, couples may find that that the expected tax savings from claiming the marriage allowance may no longer be available whilst personal allowances remain frozen.


Couples claiming the marriage allowance should review income levels each year to ensure that the allowance can continue to be claimed and to avoid unexpected tax liabilities. Couples who are not currently claiming the allowance, but who are eligible, could make income tax savings. In both cases, it may be possible to reallocate assets generating interest, dividends or property income between partners to reduce income tax liabilities.

HRMC app

The HMRC app

A new way to manage your account

The HMRC app is available from the Google Play Store for Android devices or App Store for iOS. 

A government gateway account is also required, but this can be set up in the app.


The app allows access to your personal tax account and also provides other information, including National Insurance history, State pension benefits, details of tax credits and Child Benefit and estimates of tax liabilities in the current tax year.

Image by Spencer Gu

2022-2023 tax returns

What happens if they are submitted late

The deadline for submitting a 2022-23 tax return to HMRC and paying any tax due is 31 January 2024. If the deadline is missed, HMRC can charge interest on any unpaid tax due and levy penalties. 


These charges ratchet up over time:


  • The interest rate charged by HMRC on unpaid tax is 2.5% over the bank base rate, so, currently, 7.75% p.a. Interest charges can be in addition to the penalties below;

  • A late filing penalty of £100 is payable if a tax return is up to 3 months late;

  • On 3 March 2024, a 5% penalty on any unpaid income tax, capital gains tax and Class 2 & 4 National Insurance contributions due on 31 January 2024;

  • From 1 May 2024, an automatic penalty of £10 per day applies for tax returns filed after 1 May. If a paper tax return is filed, a further penalty of £300 or 5% of the tax showing on the tax return, whichever the greater, is charged.

  • From 1 August 2024, for tax returns filed online from this date, a further penalty of £300 or 5% of the tax showing on the tax return, whichever the greater, is charged.


Taxpayers who expect to miss, or have missed, the filing deadline are advised to seek professional advice as soon as possible.


Getting ready

For the end of 2023-24 and the start of 2024 tax years

The current 2023-24 tax year ends on 5 April 2023. Action taken now could reduce tax liabilities. Such action could include:

  • Maximising pension contributions, where appropriate, to make use of any unused annual allowance (including unused annual allowances from the previous three tax years). The annual allowance is £60,000 in 2023-24 (£40,000 in the previous three tax years). Any member contributions made in a tax year should not exceed the individual’s UK relevant earnings to avoid the imposition of an annual allowance charge.

  • Making pension contributions to reduce adjusted net income to below:

    • the £100,000 threshold at which the personal allowance is eroded resulting in a 60% marginal income tax rate on taxable income between £100,000 and £125,140; or

    • The £50,000 threshold at which a liability to the High Income Child Benefit (HICB) charge can apply to families in receipt of Child Benefit.

  • Considering salary and bonus sacrifice schemes to reduce income tax and National Insurance liabilities in return for increased employer pension contributions. These schemes can also reduce adjusted net income for the purposes of mitigating any erosion of the personal allowance or the High Income Child Benefit charge.

  • Ensuring that all tax reliefs and allowances are utilised as fully as possible. For married couples, transferring assets to ‘reallocate’ income and/ or capital gains between partners can lead to further tax savings.

  • Maximise investments in tax-advantaged investment wrappers as far as possible, where appropriate. These include ISAs, Venture Capital Trusts (VCTs), Enterprise Investments Schemes (EIS) and Seed EIS, pensions and investment bonds.

  • Reviewing interest rates on savings accounts to check whether they are competitive and consider moving savings, where appropriate. Premium Bonds provide tax-free prizes.

  • Reviewing funds held in ISAs in light of the new rules from 6 April 2024 (see above).

  • Gifting assets to trusts can help to reduce potential inheritance tax liabilities and provide other tax planning opportunities without necessarily losing access to the asset.

  • Deferring capital gains tax (CGT) liabilities by investing in an EIS and claiming CGT deferral relief. CGT reinvestment relief and disposal relief are available when investing in a Seed EIS. An income tax credit is also available when EIS and Seed EIS investments are made.

Getting ready
Image by Cristina Gottardi

The next budget

6th March 2024

The next Budget is scheduled to be held on 6 March 2024. With a general election due to be held before January 2025, it is expected that this Budget may contain tax-cutting measures, some of which may take effect from the day of the Budget, others from 6 April 2024 and, perhaps, others from a future date. Any measures that are announced will not take full legal effect until they have been confirmed in the Finance Act. 


Whilst it is important to plan based on current tax law and other legislation, any planning should retain sufficient flexibility should legislation or personal circumstances change. 

Relevant life


The information provided in this bulletin is based on Financial Framework Wealth & Estate Planning's understanding of applicable legislation and current HMRC practice as of 1 January 2024. Nothing should be deemed as advice as areas will depend upon your own personal circumstances. Individuals should consult with their advisers before taking positive action.

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