Four tax changes from April – will you be hit with higher bills?

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Council tax to rise by as much as 15%
Increased tax for higher earners
Capital gains tax will be cut
Dividend allowance cut in half

By Katie Binns

published 21 February 2023

Tax changes will come into effect when the new tax year for 2023/24 begins on 6 April.

The changes have been expected since being outlined in the Autumn Statement by Chancellor Jeremy Hunt in November 2022.

Here's all you need to know.

1. Council tax to rise by as much as 15%

Council tax can now be hiked up to 5% without a referendum - but some councils may even increase them up to 15%.

It means millions of households will see higher council tax bills from April - in some cases, these hikes will be significant. Canterbury residents, for example, will face a rise of 2.24% while Birmingham residents can expect a rise of 4.99% and Berkshire residents can expect an even heftier rise of 6.76%.

Previously local authorities had only been allowed to raise council tax by up to 2.99% without a referendum.

2. Increased tax for higher earners

Top earners will pay more tax, with the additional tax rate (45%) threshold being brought down from £150,000 to £125,140. It means 250,000 more people will be pulled into the top rate of tax.

But basic rate taxpayers and higher rate taxpayers will continue to pay 20% and 40% respectively.

3. Capital gains tax will be cut: pay more when you sell a second property or shares

Capital gains tax (CGT) allowance will be cut from £12,300 to £6,000.

It means the yearly allowance that lets you sell assets (such as a second property, shares or artwork) with the first £12,300 free of CGT will drop to £6,000 - meaning you’ll end up paying more tax.

For example, if you sell a second property for £200,000, having previously bought it for £140,000, you will have made a profit or ‘gain’ of £60,000. After the current annual allowance of £12,300 is taken off, this taxable gain falls to £47,700.

But from April once the new annual allowance of £6,000 is taken off, the taxable gain will be £54,000.

And from April 2024, CGT will drop to £3,000.

4. Dividend allowance cut in half: the self-employed and investors will pay more

The Government will cut the tax-free allowance for dividends from £2,000 to £1,000.

It means hundreds of thousands of freelancers, small business owners and contractors who pay themselves through dividends and investors who receive dividend payments from their investments outside an ISA will start paying taxes sooner.

And from April 2024, dividend allowance will fall to £500.

Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities. Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.