Spring Budget Summary 2024

On Wednesday, 6 March 2024, the Chancellor gave his Spring Budget speech, where he announced various tax changes which will have a direct impact on taxpayers’ pockets. With Spring on our doorstep, we shed some light on the key measures that will soon sprout.  

1. The headline announcement, revealed prior to today’s speech, was the further 2% reduction in National Insurance for both employed and self-employed people:

• The main rate of Class 1 National insurance for employees, which was reduced by 2% from 12% to 10% at the last Autumn Statement with effect from 6 January 2024, is reducing by a further 2% to 8% with effect from 6 April 2024, on annual earnings between £12,570 and £50,270.  The 2% rate on earnings over £50,270 remains in place. 

• The main rate of Class 4 National Insurance payable by self-employed workers on earnings between £12,570 and £50,270 reduced by 1% from 9% to 8% at the last Autumn Statement and will now be reduced by a further 2%, meaning the revised rate will be 6% from 6 April 2024, saving up to £1,131 per year. The Class 2 NIC charge was abolished in the last Autumn Statement with effect from 6 April 2024.

2. The VAT registration threshold will increase to £90,000 (from £85,00) with effect from 1 April 2024, which will be welcomed by many small businesses who are close to the threshold.

3. A new ‘British ISA’ will be introduced allowing individuals to invest a further £5,000 into UK equities within this new UK ISA fund, still giving the same tax-free advantanges as the current ISA, but in addition to the current £20,000 ISA allowance. This is in addition to new British Savings Bonds which will be launched in April 2024, which will offer savers a guaranteed rate for 3 years.

4. In a boost to the housing market higher rate capital gains tax (CGT) on residential property will decrease from 28% to 24% with effect from 6 April 2024.

5. The current Furnished Holiday Let (FHL) advantageous scheme will be abolished with effect from 6 April 2025. This means that short and long term lets will be treated the same and reported together.

6. The Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief, allowing for bulk purchase relief, will be abolished from 1 June 2024 to stop any abuse of the system. MDR enables purchasers of multiple residential properties to pay SDLT based on the average price per dwelling. The abolition of this relief will increase the acquisition costs of residential property where there is more than one dwelling.

7. The High Income Child Benefit Charge (HICBC) will be reformed to be based on a household income status, rather than on one individual’s income threshold, which will come into effect from April 2026. This will be delayed because of the time it will take to reform the system and it will also mean that HMRC will have greater powers to access household information.

In the meantime, from 6 April 2024 the threshold for repayment will be increased from £50,000 to a starting threshold of £60,000 and there will also be an increase to the top of the threshold to £80,000, rather than the current £60k in place now. More families will therefore be able to keep more of their Child Benefit and for some this will be much greater than the NI cut. The rate at which the HICBC is levied will be halved from 1% of the annual Child Benefit payment for every additional £100 above the income threshold to 1% for every £200. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher.

8. There are plans to abolish the current tax system for non-domiciled individuals, which will be replaced by a new ‘simpler residence’ system with effect from April 2025, in that an individual will not need to pay UK tax on foreign earnings for their first four years of residency. They will then be treated the same as UK domiciled individuals after four years and be taxed in the UK on their worldwide income. Transitional rules will apply to individuals who currently benefit from the remittance basis of taxation.

9. Full expensing and the 50% First Year Allowance for capital expenditure on plant and machinery will be extended to leased assets. This will accelerate the rate of tax relief.  This is only available to companies.

All income tax and national insurance thresholds remain frozen at the current level.

Undoubtedly there will be more to come once we have digested the small print so watch this space for updates.

A final highlight to mention is the backing of ‘The Great British Pub’ with alcohol duty frozen again until at least February 2025.

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FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.