Spring Budget 2024 Highlights

The Chancellor, Jeremy Hunt, delivered his Spring Budget this lunchtime (Wednesday 6 March 2024), proclaiming “more investment, more jobs, better public services and low taxes with a budget for long term growth.”

With speculation confirmed on a second National Insurance cut, updates to child benefit and other leaked changes, Jeremy Hunt did manage to include a few surprises along the way.

Our TC Group team have summarised the key headlines, focusing on the points that may impact you, your business and your employees.

Trevor Shaw, Partner

Nigel Syson, Associate Director – Tax

Debbie Ince, Head of Tax (TC SEM)

 

NATIONAL INSURANCE CUTS FOR EMPLOYEES

Perhaps the biggest news for many, 27 million people in fact, from 6 April 2024 the rate of National Insurance paid by employees will be reduced again from 10% to 8%.

This follows the reduction from 12% to 10% on 6 January 2024.

For the average salary of £35,000 per annum, this means an extra £448 per year in your pocket.

 

NATIONAL INSURANCE CUT FOR SELF-EMPLOYED

National Insurance for self-employed was also cut by a further 2%, bringing it down to 6%.

This follows an initial cut announced in the Autumn Statement, in which Jeremy Hunt reduced the NI contribution for self-employed from 9% to 8%.

 

PROPERTY TAX

The ‘furnished holiday lettings’ regime will be abolished from April 2025, meaning holiday let owners will no longer be able to benefit from this favourable relief which treats the property as a business. Intended to level the playing field between furnished holiday lets and residential lets, we may see more holiday let owners selling their properties.

From June this year, where multiple properties are purchased, or properties are bought with annexes or multiple dwellings within the grounds, they’ll no longer qualify for the ‘multiple dwellings relief’ on Stamp Duty Land Tax. This’ll considerably increase stamp duty for these purchases.

On a positive note, from April this year, the higher rate of Capital Gains Tax (CGT) on the sale of residential properties will be reduced from 28% to 24%. Whilst this won’t impact most people selling their home as they’re normally exempt from CGT, it will be a welcomed reduction for property investors.

 

CHILD BENEFITS

The claw back of child benefits has focused on the earnings of the highest paid parent, rather  than family income. This has led to a harsher tax regime for some single-earner parents who face a higher tax bill than families with two working parents.

From 6 April 2024:

• The child benefit threshold will increase from £50,000 to £60,000
• The upper limit to claw back child benefit will be extended to £80,000

From 6 April 2026:

• The current system will be replaced with a regime based on collective household income – subject to the General Election later this year.

 

BRITISH ISA

The Chancellor has announced the introduction of a British ISA, allowing an additional £5,000 for investment exclusively in UK shares, that benefits from full ISA reliefs.

 

NON-DOMICILED INDIVIDUALS

After much debate in recent years, the Chancellor announced he’d abolish the current system from April 2025 and replace it with a residence based system.

Under the new rules, non-doms won’t be taxed on foreign income for the first four years of residing in the UK. After four years, they’ll be taxed on all worldwide income, inline with all other UK tax residents.

There’ll be transitional arrangements for those already in the UK.

 

VAT THRESHOLD

The VAT registration threshold for small businesses will increase from £85,000 to £90,000 from 1 April 2024.

 

TAX RELIEFS FOR CREATIVE INDUSTRIES

The 45% tax relief for touring and orchestral productions will become permanent, along with the 40% tax relief for non-touring productions.

Eligible production studios in England will also receive a 40% relief on their gross business rates until 2034.

 

OTHER DUTIES

• The alcohol duty will remain frozen until February 2025.
• Fuel duty will be frozen for the next 12 months, and the “temporary” 5p cut on fuel duty, which was due to end this month, will also be extended. Jeremy Hunt says this’ll save the average car driver £50 next year.
• The Government is increasing the Air Passenger Duty (APD) for non-economy travellers.