Welcome to our summary of the key points from the Spring 2024 budget
Curious about the UK Budget? We aim to help! Read on, to find out, in layman's terms, what the main tax changes were.
Introduction
Every year, usually in Spring, the UK Government announces the main tax changes for the year ahead, proposing legislative changes through to the finance act. The changes take time to be processed by the lawmakers and are usually enacted several months later.
The Budget is different to the Autumn Statement, which is made to the House of Commons outlining the statement of the economy and the latest predictions by the Office of Budget Responsibility ("OBR").
So in short, each year predictions of the economy are presented to the Government in the Autumn Statement. In the following Spring Budget, the Government propose changes to tax legislation which in theory are designed to help with the OBR predictions.
The Budget can be quite divisive amongst both politicians and the public, particularly when the government is gearing up to a general election. The next general election is expected to take place by January 2025, which the sceptics might suggest is why the most recent Budget (6 March 2024) favoured tax reductions for the public.
Key points from the 6 March 2024 Budget
On the 6th March 2024 the Chancellor, Jeremy Hunt, outlined the Spring 2024 Budget. The key tax points from this are covered below:
High Income Child Benefit Charge: Threshold increase
The High Income Child Benefit Charge ("HICBC") has received a lot of negative press coverage over the last few months. So it's no surprise to see the Chancellor take the opportunity to "level the playing field" with the below changes:
The HICBC threshold per individual will increase to £60,000 from 6 April 2024. This is an increase from the current £50,000 threshold.
For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved. Meaning for every £200 earned above £60,000, 1% of the Child Benefit will need to be paid back. For individuals earning over £80,000, the full child benefit will need repaying. This is an increase from the current £60,000 threshold.
As a longer term improvement, the Government plans to change the threshold to be based on household income from April 2026. The rules on this will be announced closer to the time.
VAT: Threshold increase
From 1 April 2024, the VAT threshold is increasing from £85,000 to £90,000. Whilst not a big increase, it does mean lots of small business owners will be able to de-register or not need to consider register in the near future.
National Insurance: Rate reduction
From April 2024, National Insurance contributions drop from 10% to 8% for employees and drop from 8% to 6% for the self employed.
'Non-dom' tax regime: Abolished
The non-dom tax regime, offers certain tax advantages to people who live in the UK but are not permanent residents. This is to be abolished by April 2025, replaced by new, residency based rules.
Furnished Holiday Lettings tax relief: Abolished
The furnished holiday lets ("FHL") regime, offers tax benefits to taxpayers who let out a holiday home. From April 2025 these benefits will be abolished.
This will likely have a negative impact on a significant number of taxpayers. It means landlords using this regime can no longer deduct the full cost of their mortgage interest payments from their rental income, and potentially will pay higher Capital Gains Tax ("CGT") when they sell, than they would have under the old rules.
Stamp Duty, multiple dwellings relief: Abolished
The chancellor has abolished the multiple dwellings relief, under the principle of it failing to bolster the rental market, which was the original intention. The changes are effective from 1 June 2024.
Capital Gains Tax: Rate reduction
The highest rate of CGT on the sale of residential property will fall from 28% to 24%. The lower rate of 18% remains unchanged.
If you’re unsure on how the recent Budget impacts you or your business, please get in touch and we’d be happy to help with any queries.
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