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Spring Budget 2024 analysis and comment
During what could be Jeremy Hunt’s final budget before a general election, and possibly his final budget ever, some of us at TaxCalc HQ were anticipating a plethora of vote-grabbing giveaways to turn the tide on the Conservative Party’s popularity woes. This anticipation only being heightened by increased speculation in some circles that a snap call for a May election may be imminent.
Somewhat surprisingly, this was perhaps the most predictable of budgets in recent times, with all the key pronouncements widely reported ahead of time in the financial press. If those headlines escaped your attention then, all the key changes, and more, are summarised below.
Spring budget 2024 takeaways
Further 2% reduction in National Insurance Contributions
Fresh on the heels of the reduction in National Insurance Contributions announced in last year’s Autumn Statement, a further reduction was confirmed by the Chancellor.
- Class 1 (primary) main rate of NIC reduced from 10% to 8% from 6 April 2024
- Class 4 NIC reduced from 8% to 6% from 6 April 2024
High Income Child Benefit Charge
The income threshold at which HICBC starts to be charged is increased from £50,000 to £60,000 from 6 April 2024 and the rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earnt above the threshold, to 1% for every £200. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher.
Recognising the unfairness of basing the charge on the highest earner, rather than total household income, the government plans to administer the HICBC on a household rather than individual basis by April 2026. Look out for the consultation in due course.
VAT registration threshold to increase
Having not seen an increase for the past seven years, the VAT threshold was overdue an adjustment and will increase from £85,000 to £90,000 from 1 April 2024. The deregistration threshold will be set at £88,000.
Furnished Holiday Lettings regime abolished
To alleviate the strain of housing in coastal areas, the FHL regime will be abolished from April 2025 meaning short-term and long-term lets will be treated the same for tax purposes. Individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.
Higher rate CGT on residential property to reduce
Rates for individuals taxed at the higher rate for gains on residential property not eligible for Private Residence Relief will reduce from 28% to 24% for 2024/25. The basic rate will remain at 18%.
Non-domicile regime to be replaced from April 2025
Under the new regime, anyone who has been a tax resident in the UK for more than four years will pay UK tax on foreign income and gains, as is the case for other UK tax residents. The new regime will no longer rely on the remittance basis, removing a source of complexity that incentivises individuals to keep income and gains offshore in the current system.
Other announcements
Other key announcements that may be a relevance to your clients were as follows:
- No changes to income tax bands or rates in 2024/25
- Dividend allowance reduces from £1,000 to £500 in 2024/25
- No change to National Insurance thresholds or limits in 2024/25
- No change to employer’s NIC (secondary) rates in 2024/25
- CGT annual exempt amount reduces from £6,000 to £3,000 in 2024/25
- No change to IHT limits or rates in 2024/25
- No change to corporation tax thresholds or rates in 2024/25
- Full expensing for capital expenditure to be extended to include leased assets
- New British ISA with additional £5k per annum limit for investing in UK assets
- Extension to various cultural reliefs such as Audio-Visual Expenditure Credit, Theatre Tax Relief and a new Independent Film Tax Relief
- SDLT multiple dwellings relief to be abolished
And finally
A word of warning to accountants and tax advisers who are not currently members of a recognised professional body, HMRC is once again consulting on proposals to raise standards by strengthening the regulatory framework in the tax advice market. Its consultation on whether to require all paid tax practitioners to be a member of a recognised professional body was announced amongst the budget press releases and will remain open until 29 May 2024.
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Rozzo (9 months ago)
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