00:00The autumn budget last year announced some major tax changes in the UK.
00:04This video covers the key changes to be aware of ahead of April this year and the start of the next
00:10tax year. Even before these tax changes, the average UK household will pay over £1.2 million
00:16in tax over their lifetime. So understanding what changes are coming in and how you can
00:22mitigate them is really important to be able to protect your finances. If you're new to this
00:27channel, I'm Matt. I've been a finance consultant for over 10 years. I now run my own company
00:32and on this channel I talk all things personal finance. So the first tax change that I'm going
00:37to cover is on vehicle excise duty. This is a tax payable for every car that uses public roads in
00:43the UK. Currently electric vehicles don't have to pay this tax but from the 1st of April 2025
00:49there's going to be a big change as for the first time owners of electric vehicles will also need
00:55to pay this tax. For vehicles registered after the 1st of April 2017, the standard rate of £195 per
01:03year will be payable. This will also apply to petrol and diesel vehicles as well but the biggest impact
01:09will be on the purchase of brand new cars with high CO2 emissions. For example, if you had the money
01:14to be able to purchase a Range Rover Sport 4.4 V8 then you'd have to pay an eye-watering £5,490
01:22in tax. So if you're in the market for a new car it's important to look at its CO2 emissions to
01:28understand its impact on the total cost of ownership for the vehicle. The second tax change is on capital
01:34gains tax. This is now payable on gains of over £3,000 from selling assets, for example cryptocurrency
01:41assets or stocks and shares that's outside an ISA. The tax-free allowance is £3,000 per year so you can
01:48make a gain of this much before you have to pay capital gains tax. Last year the tax rates were
01:54increased. For the basic rate taxpayer it was increased from 10% to 18% and for the higher rate
02:00and additional rate taxpayer it was increased from 20% to 24%. If you're thinking about selling assets in
02:06the short term then it's worth considering whether to sell some of the assets that you want to dispose of
02:11prior to the 5th of April this year. So you can use your £3,000 capital gains tax-free allowance
02:17in this personal tax year and then you could dispose of additional assets after the 6th of April
02:23to benefit from the £3,000 tax allowance in the next personal tax year. For example if you wanted to
02:29dispose of some cryptocurrency which had increased in value and your total gain was £6,000. If you sold
02:36and realised that gain prior to the 5th of April you would have to pay £540 if you're a basic rate
02:43taxpayer and £720 if you're a higher rate or additional rate taxpayer. Whereas if you sold
02:49and realised a gain of £3,000 prior to the 5th of April and a further £3,000 after the 6th of April
02:56then no capital gains tax would be due as it's within your tax allowance for each personal tax year.
03:02The third tax change is on stamp duty. The thresholds for paying tax on property purchases
03:07are about to change. If you're a first-time buyer before the 1st of April the property value can be
03:14up to £425,000 before you start paying tax and if you're an existing homeowner moving home the
03:21property value can be up to £250,000. However the nil rate tax band is reducing to £300,000 for first-time
03:29buyers and to £125,000 for everyone else. That means for a £400,000 property a first-time buyer
03:37would pay £0 in stamp duty before the end of March 2025 and £5,000 from the 1st of April and
03:45home movers would go from paying £7,500 to £10,000 based on the new tax rules. So it's quite a
03:53significant impact to the savings needed for both home movers and first-time buyers.
03:58The fourth tax change is for furnished holiday lettings. In April of this year the UK government
04:03will be reducing lots of the beneficial tax advantages that short-term lettings currently
04:08receive. So that applies to Airbnbs. Higher or additional rate taxpayers are going to be impacted
04:15the most by these changes. At the moment you can deduct your full mortgage interest from your
04:20rental income but this is going to be restricted from April 2025 to a 20% tax credit. This therefore
04:26doesn't have an impact on basic rate taxpayers who pay 20% tax anyway but it will have an impact on
04:33higher or additional rate taxpayers who pay 40% or 45% in income tax. For example for someone who is a
04:40higher rate taxpayer and receives £22,000 in rental income from an Airbnb property. If the mortgage interest
04:48is £5,000 before April the tax bill income would be £17,000 so that's a tax bill of £6,800 at a 40%
04:58income tax rate. Now with the changes you can no longer deduct the £5,000 mortgage interest in full.
05:04You have to pay tax at 40% on the £22,000 rental income which equals £8,800 and then you receive a
05:1320% tax credit on the £5,000 mortgage interest which in this example equals £1,000 as a tax credit.
05:20So the effective tax liability is £7,800 that's £1,000 more than before this tax change comes into
05:28effect. The fifth and final tax change that I'm going to cover in this video is applying VAT on
05:33private school fees. The UK government removed the VAT exemption on private school fees and from the 1st of
05:40January 2025 private schools have been required to charge VAT on their fees. There are some things
05:46which might be exempt such as school meals but for the bulk of the fees like education and boarding
05:52costs VAT will be applied. So that wraps up five key tax changes to be aware of this year and ahead
05:58of the new personal tax year starting in April. I know personally tax increases is not a nice topic
06:05but it's important to understand it so you can try and mitigate the tax increases as much as
06:10possible. If you found the video useful please do subscribe to my channel give the video a like
06:15and I'll see you on the next video.
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