What will self-employment tax be for 2023/24? There are usually new UK tax brackets and other updates to thresholds introduced each April.
So here are eight self-employed tax changes to understand for the new tax year, from National Insurance hikes to business rates changes.
Here's what you need to know for the tax year 2023/24.
The personal allowance in 2023/24 will remain £12,570. This is how much you can earn tax free.
The government has frozen this tax allowance until 2026. Businesses and taxpayers in general face rising costs throughout 2023, so could feel the pinch of this personal allowance freeze.
And over the long-term, if earnings rise and the personal allowance stays the same, then you’ll pay more in tax.
The additional income tax threshold is £125,140 (reduced from £150,000 in April 2023). This means more self-employed people could fall into this tax bracket this tax year.
These are the income tax rates and thresholds the self-employed should be aware of in 2023/24 (these are the same as 2022/23):
There are different bands and rates for Scotland.
The self-employed usually pay both Class 2 and Class 4 National Insurance through their annual Self Assessment tax return.
Small business owners with staff also need to pay employee National Insurance contributions via payroll.
A planned rise in National Insurance in 2023 was reversed in autumn.
No National Insurance incurred between
£0 to £6,724
£0 to £6,724
Small profits threshold for Class 2 NICs
Lower profits limit for Class 4 NICs
Upper profits limit
Here are the National Insurance rates:
Check the government website for more information.
If you’re an employer, or also have income from employment, here are the Class 1 National Insurance tax thresholds.
2023/24 weekly threshold
2023/24 annual threshold
Lower earnings limit
Upper earnings limit
Earnings above the primary threshold incur NICs at 12 per cent in 2023/24.
Earnings above the upper earnings limit incur NICs at 2 per cent in 2023/24.
Employer NICs are due on annual salary payments to employees above a certain threshold. This is £9,100 in 2023/24 (a weekly threshold of £175).
The rate is 13.8 per cent in 2023/24 (down from 15.05 per cent in 2022/23).
National Insurance is also due at this rate on any work benefits you give employees.
Rate from April 2023
National living wage
Rate for 21-22 year olds
Rate for 18-20 year olds
Rate for 16-17 year olds
Read more about the national minimum wage.
The dividend tax rate is staying the same in 2023/24.
But Jeremy Hunt slashed the dividend allowances in his Autumn Statement, so for 2023/24 you’ll pay dividend tax on the dividends you earn above £1,000 (instead of £2,000) at these rates:
The dividend allowance will be cut again to £500 for the 2024/25 tax year.
Making Tax Digital has been in place since 2019 for VAT-registered businesses with a taxable turnover of more than £85,000. And it came in for all other VAT-registered businesses in 2022.
This system requires businesses to keep digital records and file VAT returns digitally. Businesses need to use relevant accounting software.
Eventually all taxpayers will need to use Making Tax Digital, but it won’t apply for Self Assessment returns until at least 2026 – three years later than planned.
Read more about Making Tax Digital.
A new points-based system for tax penalties was introduced in January 2023.
Initially this will just apply to VAT-registered businesses, but will affect Self Assessment tax payers (with an income of more than £50,000 a year) from 2026.
Make sure you’re up to speed with the changes.
Retail, hospitality, and leisure businesses should be aware of the business rates changes for 2023.
From April 2023, business rates will apply based on a new rateable value. This is to take into account changes in property value since 2017.
To help with this transition, the government has confirmed:
Please use this article as a guide and get professional tax advice on self-employed tax brackets if you're not sure about anything.
Catriona Smith is a content and marketing professional with 12 years’ experience across the financial services, higher education, and insurance sectors. She’s also a trained NCTJ Gold Standard journalist. As a Senior Copywriter at Simply Business, Catriona has in-depth knowledge of small business concerns and specialises in tax, marketing, and business operations. Catriona lives in the seaside city of Brighton where she’s also a freelance yoga teacher.
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