Four important tax and pension changes from 2024

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The end of a year is a good point to take some time to reflect on the last 12 months. So let’s take a look back at four of the key tax and pension changes from 2024, so you can plan for 2025 with confidence.

1. The State Pension went up

In April 2024, the State Pension got a generous 8.5% boost, meaning those getting the full new State Pension got an increase of about £900 a year, and those on the full basic State Pension got almost £700 more per year.

The State Pension should rise every year (thanks to the triple lock), but an increase of 8.5% is one of the highest increases we’ve seen in recent years.

You can find out more about the State Pension, including how much you might get and when you might get it, in Changes to the State Pension – what you need to know.

2. National Insurance was cut…twice

National Insurance contributions for employees were cut from 10% to 8% in April, having only been recently cut from 12% to 10% in January. The additional 2% cut means a saving of about £450 a year for someone with a salary of £35,000.

Class 4 National Insurance contributions (which you might pay if you’re self-employed) were also cut from 9% to 6% in April.

3. The child benefit threshold changed

You can now earn up to £60,000 and keep all your child benefit. Previously, you or your partner only needed to earn £50,000 before you paid a tax charge that effectively reduced the amount of child benefit you get.

For now, the threshold still applies to you and your partner’s earnings as individuals, rather than your earnings as a household. 

You can use the government’s child benefit tax calculator to find out how much child benefit you could get in a year, and the amount you’d pay as the tax charge.

If you want to find out how you could potentially use your pension to keep more of your child benefit, read Getting your child benefit back – and avoiding the tax charge.

4. Capital Gains Tax increased

Capital Gains Tax (CGT) is the tax you pay on profits you make from selling assets like second homes and some investments.

In the Autumn Budget, it was announced that the basic rate of CGT increased from 10% to 18% and the higher rate (paid by higher and additional-rate taxpayers) increased from 20% to 24%.   

However, the amount of CGT you pay on second homes hasn’t changed. The higher rate is still 24%, and the lower rate is still 18%.

What’s to come in 2025?

When it comes to tax and pension changes, 2025 is looking quiet so far. In the Autumn Budget, the Chancellor confirmed that income tax bands, National Insurance rates and VAT will all stay at their current levels.

When it comes to your personal allowance (the amount you can earn in a tax year before you need to pay income tax), it’s been confirmed that it’ll stay frozen until 2028, so no change there either.

One change we do know is coming is another State Pension boost. Like we mentioned earlier, the State Pension is due to increase every year. So, in April 2025, it’s rising again – this time by 4.1%.

 

The information here is based on our understanding in December 2024 and shouldn’t be taken as financial advice.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.