Spring Budget 2024

The Chancellor of the Exchequer (Jeremy Hunt) delivered his Spring Budget on 6 March 2024. The budget is likely to be the last major fiscal announcement of this Parliament with a general election due later in 2024. With little headroom to announce significant tax cuts, the budget reiterated many of the measures announced in the Autumn Statement, along with some new measures to help businesses, families, and individuals. Several consultations are underway with further detail awaited in some key areas.

Tax paid by individuals

The Chancellor did not make any major announcements about tax to be paid by individuals from April 2024. A further reduction in national insurance contributions of 2% was announced along with some changes to the tax paid by higher income earners who receive child benefit. A new UK-based ISA allowance was also announced.

 Income Tax – no changes announced

No changes were made to the amount of income tax an individual pays. The personal allowance remains frozen at £12,570. In England, Wales and Northern Ireland, the basic tax rate of 20% continues to be paid on earnings up to £50,270 with the higher rate of 40% paid on earnings between £50,271 and £125,140. The additional tax rate of 45% is paid on all earnings above £125,140. Where annual income exceeds £100,000, the personal allowance is lost at a rate of £1 for every £2 of income above £100,000. No personal allowance is available if you are an additional rate taxpayer. Different rates of tax are paid by Scottish taxpayers (as shown at Appendix A).

National insurance – reduced by 2%

The main rate of primary Class 1 National Insurance contributions is being reduced from 10% to 8% from 6 April 2024.

For the self-employed, the main rate of Class 4 National Insurance contributions is being reduced from 8% to 6% from 6 April 2024. This is in addition to the previously announced reduction in the main rate of Class 4 National Insurance contributions from 9% to 8% and means that from 6 April 2024 the main rate will reduce from 9% to 6%.

High Income Child Benefit Charge threshold

The High Income Child Benefit Charge adjusted net income starting threshold is being increased from £50,000 to £60,000, from April 2025. The taper between £60,000 and £80,000 is being extended. The charge on taxpayers with income above £80,000 will be equal to the full amount of child benefit paid. In a further change, from April 2026, child benefit will be taxed based on earnings as a household, rather than an individual

New UK Individual Savings Account (ISA) investment allowance

The government has announced the introduction of a new UK ISA. This is a new ISA allowance of £5,000 in addition to the existing annual ISA allowance of £20,000 to invest exclusively in the UK. This will be introduced after a consultation to be completed by 6 June 2024.

Capital Gains Tax (CGT) – reduced annual exemption

As previously announced, the annual exemption amount for capital gains tax for individuals will reduce from £6,000 to £3,000 from April 2024. The CGT rate for higher rate taxpayers on gains on disposals of residential properties will be reduced from 28% to 24% from April 2024.

Non-Dom status to be replaced by new residence-based system

The government will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a residence-based regime, which will take effect from 6 April 2025. The government has also announced an intention to move to a residence-based regime for inheritance tax, with plans to publish a policy consultation on these changes, followed by draft legislation later in 2024.

Tax paid by businesses

No major announcements were made affecting the tax paid by businesses. The full expensing deduction for incorporated businesses has been extended to include leased assets. The VAT registration threshold was increased to £90,000. The furnished holiday lets regime is being removed.

Full expensing deduction extended to include leased assets

The Chancellor announced an intention to include full expensing tax relief on leased assets, though the date of commencement is not yet known until draft legislation is published.

VAT Threshold increased to £90,000

From 1 April 2024 the taxable turnover threshold which determines whether a person must be registered for VAT will be increased from £85,000 to £90,000. The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £83,000 to £88,000.

Furnished Holiday Lettings (FHL) regime abolished

The government will abolish the FHL tax regime, eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let out residential properties to longer-term tenants. This will take effect from April 2025.

What does this mean for your clients?

There is little change in the tax efficient advice accountants will be providing to clients for the 2024/25 tax year and beyond. The key tax rates from April 2024 are shown at Appendix A to this blog.

Information on all the measures announced by the Chancellor, including the annual uprating of duties and rates, can be found in the Spring Budget 2024 and in other documents from the Office for Budget Responsibility.

An overview of all the tax legislation and rates  is also available. Tax Information and Impact Notes (TIINs) contain more detail on the impact of measures that are being legislated for in the Spring Finance Bill.

APPENDIX A: KEY TAX RATES

Income tax rates: England, Wales and Northern Ireland
(non-dividend income)
2024/25 tax year 2023/24 tax year
0% starting rate for savings only Up to £5,000 Up to £5,000
0% on personal allowance (subject to any claw back of PA) £0 – £12,570 £0 – £12,570
20% basic rate tax £12,571 – £50,270 £12,571 – £50,270
40% higher rate tax £50,271 – £125.140 £50,271 – £125.140
45% additional rate tax Above £125,140 Above £125,140
Scottish rates of income tax (non-dividend income)
0% on personal allowance (subject to any claw back of PA) £0 – £12,570 £0 – £12,570
19% starting rate £12,571 – £14,876 £12,571 – £14,732
20% basic rate tax £14,877 – £26,561 £14,733 – £25,688
21% intermediate rate tax £26,562 – £43,662 £25,689 – £43,662
42% higher rate tax £43,663 – £75,000 £43,663 – £125,140
45% advanced rate £75,001 – £125,140 n/a
48% top rate (47% for 2023-24) Above £125,140 Above £125,140
National insurance 2024/25 tax year 2023/24 tax year
Lower earnings limit, primary class 1 (per week) £123 £123
Upper earnings limit (UEL), primary class 1 (per week) £967 £967
Primary threshold (PT) (per week) £242 £242
Secondary threshold (per week) £175 £175
Employment allowance (per year/employer) £5,000 £5,000
Employee’s primary class 1 rate between PT and UEL

From 6 April 2023 to 5 January 2024
From 6 January 2024 to 5 April 2024

8% 12%
10%
Employee’s primary class 1 rate above upper earnings limit 2% 2%
Married women’s reduced rate between PT and UEL
From 6 April 2023 to 5 January 2024
From 6 January 2024 to 5 April 2024
1.85% 5.85%
3.85%
Married woman’s rate above upper earnings limit 2% 2%
Employer’s secondary class 1 rate above secondary threshold 13.8% 13.8%
Class 2 small profits threshold (per year) £6,725 £6,725
Class 2 lower profits threshold (per year) n/a £12,570
Class 2 small profit threshold (voluntary- per week) £3.45 £3.45
Class 2 rate (per week where profits are above lower profits limit threshold £0 £3.45
Class 3 voluntary rate (per week) £17.45 £17.45
Class 4 lower profits limit £12,570 £12,570
Class 4 upper profits limit £50,270 £50,270
Class 4 rate between lower profits limit and upper profits limit 6% 9%
Class 4 rate above upper profits limit 2% 2%
Class 1A/1B NIC 13.8% 13.8%

Disclaimer

This blog draws on information published by HMRC and other professional bodies. It is not a complete guide to the 2024 Spring Budget. Information may be subject to change and Initor Global accepts no responsibility should you decide to rely on the information we have published in this blog. Professional advice should always be taken as necessary based on your individual circumstances.

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