top of page
Search
  • danielle2257

Spring Budget 2024

During what has to be one of noisiest Budget speeches I can remember – the Deputy Speaker really had her job cut out trying to keep the rabble in order today! – was there much for taxpayers to get excited about?

 

National Insurance cuts

 

Much noise was made in the press last night and this morning about the Chancellor knocking a further 2p off the main rate of employees’ National Insurance from April (taking it to 8%) and, sure enough, this was announced and, so that the self-employed did not feel left out, the rate of Class 4 national insurance will reduce by a percentage point to 6% from April.

 

However, tax bands and personal allowances remain frozen, the impact of which is likely to bite more than a reduction in national insurance.  There are already lots of individuals finding themselves needing to file a tax return for the first time and pay tax on their savings and investments and this will likely continue whilst we are in an era of higher interest rates and smaller tax-free allowances.

 

High Income Child Benefit Charge

 

The HICBC has been controversial since it was first introduced in 2013, largely because it was seen to penalise those families when one parents stays at home while the other goes out to work.  A two-earner household where both parents earn £49,999 has no clawback of Child Benefit claimed, whilst a single-earner household with an income of £60,000 gets their entire Child Benefit clawed back.

 

This was finally addressed in today’s Budget with the Chancellor announcing that from April 2024 the threshold above which Child Benefit starts to be abated will rise to £60,000 (from £50,000) and that the upper level will rise from £60,000 to £80,000. 

 

From April 2026, HICBC will be levied on household income, rather than individual income, which should mean that more taxpayers benefit.  A consultation on this proposed change will follow.

 

Holiday Lets

 

Taxpayers with holiday properties that they let out will see their tax-favourable treatment come to an end from April next year.  For years, such lettings have been treated in the same way as running a business, bringing with it tax advantages such as full expensing of mortgage interest, capital allowances, pensionable earnings and potentially favourable capital gains tax (CGT) treatment when the property is sold.  They will now be taxed in the same way as long-term lets – so restricted reliefs for mortgage interest, no pensionable earnings and the usual CGT residential property rates on sale.

 

Capital Gains Tax on Residential Property

 

Talking of residential property, there was an unexpected announcement that the higher rate of this tax, which currently sits at 28%, will reduce to 24% from 6 April this year, perhaps providing some consolation to any furnished holiday let owners who now wish to sell the property ahead of the rule changes covered above, but not so much for any conveyancing solicitors who will have some clients wanting to hold off exchanging until after the change comes into effect!

 

Companies

 

For most companies there was little in the Budget to get excited about with no changes were announced to Corporation Tax or VAT rates.  There will be a consultation on whether the full expensing announced in November’s Budget will be extended to include plant and machinery for leasing but, unless your business is in the film industry (for which there were some tax breaks announced), there was not much here at all.

 

Non-UK Domiciled Individuals

 

There have been mutterings over the years in certain areas of the press about non-doms and how they are treated for UK tax purposes.  However, it cannot be denied that wealthy non-doms spending and investing their money in the UK help to boost the economy.

 

Stealing Labour’s thunder a bit (they announced back in 2022 that, if elected, they would scrap the non-dom rules) the Chancellor today announced that from April next year the current regime will be abolished and there will instead be a simpler residence-based regime where non-doms that opt in will not pay UK tax on foreign income or gains arising in the first four years of being resident in the UK.  During that time, they can bring monies into the UK without an additional tax charge which the Government hopes will encourage them to do so and invest the monies here.

 

For those non-doms already living in the UK and being taxed under the existing regime, there will be transitional arrangements to soften the impact of the changes.

 

Inheritance Tax

 

Tucked away under the announcement about the non-dom regime was a small paragraph stating that the Government intend to move to a residence-based regime for Inheritance Tax which will, again, impact those who are not domiciled in the UK.  There will be a consultation document on the changes with the draft legislation later in the year when more will be known about the Government’s plans.

 

 

Will any of this have been enough to get the Conservatives through the next General Election? We now wait to see whether, as is being speculated, this will be called in May or whether we will have to wait until the end of the year to find out.

25 views0 comments

Recent Posts

See All

Comments


bottom of page