The 2023-24 UK tax year was the first to be lived through fully under the new corporation tax regime, the lowered additional rate threshold, the reduced dividend and CGT allowances, and — by mid-year — a falling rate of National Insurance. It was the year in which the structural changes legislated in the volatile months of 2022 fully bedded in. For owner-managed businesses, it produced the first set of practical lessons about life under the new system.
Corporation tax in practice
1 April 2023 had marked the formal start of the two-tier corporation tax regime. By the time most clients filed their first CT600 returns under the new rules — typically in early 2024 for September and December 2023 year-ends — the practical issues had become clear.
The associated companies rules caught out the largest number of clients. A director with a single trading company and a dormant SPV was suddenly dividing both the £50,000 small profits limit and the £250,000 upper limit by two — pushing the trading company into the marginal band on lower profits than expected. Our annual accounts team built an associated companies questionnaire into every year-end engagement from spring 2023 and recovered hundreds of pounds for some clients by triggering dormant company strikes off.
The interaction of marginal relief and the augmented profits figure caught out clients who took non-group dividends through trading companies. Splitting investment activity into separate holding companies became a more common conversation than it had been in years.
Full expensing in its first year
The full expensing regime from 1 April 2023 produced clean 25% effective relief on qualifying new plant and machinery for companies above £250,000 of profit and a slightly lower effective rate for marginal-band companies. The first full year of operation produced strong claims across our manufacturing, logistics, and IT-intensive client base. The interaction with hire purchase and finance lease structures required careful documentation, and several clients had to amend asset purchase paperwork to confirm new (rather than second-hand) status to claim full expensing.
The NIC trajectory mid-year
The 6 January 2024 cut in Class 1 employee NIC from 12% to 10% was the first mid-tax-year NIC movement we had seen in years and required co-ordinated payroll updates. The further cut to 8% from 6 April 2024 was announced in the Spring Budget. For employees, the cumulative effect over the 15-month period from October 2023 to April 2024 was a four percentage point reduction in the main NIC rate — though the personal allowance and higher rate threshold freezes remained in place, partly offsetting the cash gain through fiscal drag.
For director-shareholders, the optimum salary point shifted fractionally upward in each of our six-monthly remuneration reviews. The cumulative model produced an updated optimum salary for 2024-25 that ran some hundreds of pounds above the equivalent figure for 2022-23.
The first year of £6,000 CGT and £1,000 dividend allowances
The April 2023 reduction in the CGT annual exempt amount to £6,000 and the dividend allowance to £1,000 fed through into the 2023-24 self assessment returns we filed in late 2024. For property landlords disposing of single rental flats, the reduced exempt amount eliminated the buffer that had previously absorbed modest gains. For director-shareholders drawing dividends of any meaningful size, the dividend allowance was no longer a planning tool — it had become rounding.
Our self assessment team flagged these changes in every personal tax engagement from autumn 2023 onward, and several clients adjusted their salary-dividend split to use the personal allowance more efficiently against the dividend stack.
Pensions reopened as a planning tool
The Spring Budget of March 2023 had raised the annual pension allowance from £40,000 to £60,000 and removed the Lifetime Allowance charge. By April 2024, both changes had been in operation for a full year and several owner-managed business directors had resumed substantial employer pension contributions as a corporation tax planning measure. For companies sitting in the marginal band, a £30,000 to £60,000 employer pension contribution could move taxable profit out of the 26.5% effective band and into the 19% band, producing real cash savings.
What did not change
The personal allowance stayed frozen at £12,570 and the higher rate threshold at £50,270. The additional rate threshold remained at £125,140. The inheritance tax nil-rate band at £325,000 and residence nil-rate band at £175,000 remained frozen. The Stamp Duty Land Tax thresholds were temporarily elevated from the September 2022 changes but were due to revert in 2025.
The election shadow
By the end of 2023-24, the political backdrop had shifted decisively toward a general election in 2024. The Spring Budget of March 2024 contained measures clearly framed for the campaign — most notably the non-dom abolition, which was a Labour policy the Conservative government chose to pre-empt. We held back from making irreversible planning recommendations on the non-dom regime until the post-election position became clear in the Autumn Budget of October 2024.
The verdict
The 2023-24 tax year was structurally the most important of the cycle. The full corporation tax regime, full expensing, marginal relief, and the reduced personal allowances all became lived experience rather than legislative announcement. For owner-managed businesses, the year produced the planning vocabulary — associated companies, augmented profits, intensity threshold, optimum salary — that has framed every planning conversation since.
If you would like a structured 2023-24 retrospective applied to your own position, book a planning call with our team.