Four tax changes affecting millions of Brits in weeks – check if you'll be hit with higher bills | The Sun

MILLIONS of people have or will see changes come into effect this spring as the new tax year starts in April.

From hiked taxes to slashed allowances, we round up what households should be aware of.

The current 2022-2023 tax year comes to an end on April 5, and the new tax year for 2023-2024 will begin on April 6.

Every tax year typically brings with it a lot of changes, and 2023 is no different.

It comes following a raft of new policies announced in the Autumn Statement in November 2022.

Here's all you need to know to make sure you're up to date.

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1. Council tax to increase

Council tax is set to rise for millions of households within weeks – and could go up by as much as 15%.

Local authorities were given the green light in the Autumn Statement to raise the levy by as much as 5%.

Any rises will come into effect from April.

But some councils have been allowed to hike bills even more than this to fill holes in their budgets – in some cases, by as much as 15%.

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Local authorities were previously only allowed to raise council tax by 2.99% – anything higher would have required a local referendum.

The amount you'll pay is determined by the local council and depends on which "band" the property you live in falls under.

2. Capital gains tax will be cut

From April 6, the capital gains tax (CGT) allowance will also be cut from £12,300 to £6,000.

Capital gains tax is the money you pay to HMRC when you sell something that has gone up in value, such as stocks and shares, artwork or even a second home.

It was frozen at £12,300 until 2026 but that has now changed.

Next April, CGT will then drop to £3,000.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: "Capital gains tax is a tax on inflation, and at a time when it’s racing ahead in double digits, investors are facing a triple whammy of blows.

"If their investments outside of tax wrappers manage to keep up with inflation, they’ll be taxed on anything over their annual allowance when they sell up, seriously denting their inflation-matching ability."

3. Dividend allowance slashed in half

You may get a dividend payment if you own shares in a company, and you can earn a certain amount without paying tax.

However, the dividend allowance will be halved from £2,000 to £1,000 in April.

It'll then be halved again to £500 from April 2024.

This means millions of taxpayers will start paying taxes sooner, including pensioners, self-employed and business owners who pay themselves in dividends.

The dividend allowance has been held at £2,000 in the previous six tax years.

How much tax you'll pay on dividends above the allowance depends on your income tax band.

For example, basic rate taxpayers pay an 8.75% rate, higher rate earners pay 33.75% and additional rate Brits pay 39.35%.

4. Increased tax for higher earners

The only big change to tax bands from April 2023 is for people in the additional rate tax bracket.

The threshold for the 45% tax band will fall from £150,000 to £125,140.

Meanwhile, the basic rate (20%) and the higher rate (40%) thresholds remain the same.

The additional rate change is expected to pull a quarter of a million more people into the top rate of taxation.

What isn't changing?

Stamp duty cut to remain at higher level

Since September, the amount which you pay on stamp duty has doubled from £125,000 to £250,000.

Under the previous system, no stamp duty was paid on the first £125,000 of any property purchase.

The threshold at which the duty was paid for first-time buyers was £300,000.

But this too has increased, to £425,000.

The maximum value of a property on which first-time buyers’ relief can be claimed will also increase from £500,000 to £625,000.

These changes will remain in place until March 31, 2025.

Personal allowance freeze extended

The personal allowance is the amount you can earn each year tax-free.

In the current tax year, the figure is £12,570.

The thresholds for income tax generally rise each year so that people can earn more without paying more tax.

However, following the Autumn Statement, the thresholds are frozen until 2028.

This means more households are expected to be dragged into higher tax bands as wages increase.

ISA allowances are staying

The allowance for individual savings accounts (ISAs) is also staying at £20,000.

This means you can save up to this much in a cash or stocks & shares ISA.

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Meanwhile, the junior ISA is staying at £9,000.

Before 2017, the ISA allowance increased yearly in line with inflation.

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