Spring Budget 2024

On 06 March 2024 the chancellor, Jeremy Hunt, announced the Spring Budget 2024. Read how the 2024 Spring Budget affects you and your taxes. Our clients can ask us what it means to them, all included in our low fixed-fees.

Highlights of the Spring Budget 2024

Businesses:

  • Employees NIC reduces further to 8%.
  • Self employed NIC reduces from 9% to 6%
  • The tax-free dividend allowance reduces from £1,000pa to £500pa
  • The annual capital gains allowance reduces from £6,000 to £3,000
  • Self employed Class 2 NIC contributions will only be voluntary.
  • Directors should continue to take a salary of between £9,100 and £12,570, plus dividends.
  • VAT registration threshold to increase from £85,000 to £90,000 on April 1st. 
  • VAT deregistration threshold to increase from £83,000 to £88,000 on April 1st.

Other:

  • Multiple Dwellings Relief will be abolished from 1 June 2024.
  • The current tax regime for non-domiciled individuals will be abolished from 6 April 2025 and eventually replaced with a new residence-based system, known as the Foreign Income and Gains (FIG) regime.
  • The higher rate of Capital Gains Tax for residential property disposals by individuals, trustees and personal representatives, where Private Residence Relief is not available, to be cut from 28 percent to 24 percent from 6 April 2024. The lower rate will remain at 18 percent for any gains that fall within the basic rate band.
  • The Furnished Home Lettings tax regime is to be abolished from April 2025.
  • The Agricultural Property Relief (APR) will on 6th April be extended to non-agricultural environmental land management.
  • The High Income Child Benefit Charge (HICBC) threshold to be increased from £50,000 to £60,000 from April 2024. Child Benefit is also now not fully withdrawn until individuals earn £80,000 or more.

And for the creative industry:

  • The Introduction of an independent Film Tax Credit for UK independent films with a production budget of less than £15 million.
  • Permanent rates of relief for Theatre Tax Relief, Orchestra Relief, and Museums and Galleries Exhibition Tax Relief (MGETR) at 45 percent for touring productions and 40 percent for non-touring productions and all orchestral productions.
  • An additional tax relief credit of 5 percent available for visual effects costs in film and high-end TV, and the current 80 percent cap on qualifying expenditure will be removed.

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Welcome
To Spring Statement 2024, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.

If you need further assistance just let us know or you can send us a question for our Question and Answer Section.

We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.

Please contact us for advice on your own specific circumstances. We’re here to help!

 
Spring Statement 2024
· Introduction
· National Insurance contributions (NICs) to be cut
· Non-dom tax breaks to be abolished
· VAT registration threshold increase
· Cut to property capital gains tax
· New British ISA and British Savings Bonds
· Chancellor takes ‘further steps’ on Full Expensing
· Furnished Holiday Lettings regime scrapped
· Oil companies windfall tax extended
· Raising child benefit threshold
· Childcare support expanded
· Fuel duty freeze extended
· Alcohol duty frozen until next year
· Pension pots for life
· Tax credits for film industry to rise
· Research and Development funding
· New tax on vaping and tobacco duty rise
· Updates on the economy and Government spending
Introduction top
Cuts to National Insurance contributions and the abolition of so-called ‘non-dom’ tax breaks were among the headline announcements in Wednesday’s Budget.

The Chancellor delivered his speech in the House of Commons, unveiling a range of tax and spending measures.

However, there was no cut to income tax, despite much speculation in recent weeks that one might come due to the General Election, set to be held this year.

Aside from the headlines mentioned above, some of the other most significant announcements included:

–     Cut to property capital gains tax
–     Rise in VAT registration threshold
–     Full expensing to apply to leased assets
–     New British ISA
–     Rise in child benefit threshold
–     Freeze on fuel duty

Below, we delve into more of the details and summarise the biggest changes that were unveiled this afternoon.

 
National Insurance contributions (NICs) to be cut top
As expected, Mr Hunt’s main announcement surrounded NICs. In line with prior media reports, he went even further than the changes he made on NICs in the Autumn Statement last November.

He announced a 2p cut in NICs. From April 6 employee NICS will be cut from 10% to 8%. Meanwhile, self-employed NICS will go from 8% to 6% (a 1% cut from 9% to 8% was already announced last year).

Mr Hunt said: “It means an additional £450 a year for the average employee or £350 for someone self-employed. When combined with the autumn reductions, it means 27 million employees will get an average tax cut of £900 a year and 2 million self-employed will get a tax cut averaging £650.”

The move is estimated to be worth over £10 billion a year for workers across the UK. Combined with the abolition of the requirement to pay Class 2 NICs, an average self-employed person on £28,000 will save £650 a year from April 6, the Treasury estimated.

Mr Hunt had already announced a reduction in employees’ National Insurance (NI) by two percentage points from 12% to 10% (for Primary Class 1 contributions) in November – a change affecting an estimated 27 million people.

 
Non-dom tax breaks to be abolished top
As had been trailed in many of the newspapers in the week leading up to the Budget, the contentious ‘non-dom’ scheme will be scrapped.

Mirroring what has been one of the higher profile policies of the Labour Party, Mr Hunt said the tax breaks for wealthy foreign residents in the UK will be abolished and replaced with a new scheme.

So-called non-doms are UK residents but not domiciled here for tax purposes.

Mr Hunt said the Government would “introduce a system which is both fairer and remains competitive with other countries.”

“The Government will abolish the current tax system for non-doms, get rid of the outdated concept of domicile and the remittance basis in the tax system, and replace it with a modern, simpler and fairer residency-based system,” he told Parliament.

The plan is that, from April 2025, new arrivals to the UK will not be required to pay any tax on foreign income and gains for their first four years of UK residency. Those who stay after four years will then pay the same tax as other UK residents.

The Treasury described the new scheme as the 4-year foreign income and gains (FIG) regime.

The Treasury stated: “Individuals who on 6 April 2025 have been tax resident in the UK for less than 4 years (after 10 years of non-UK tax residence) will be able to use this new regime for any tax year of UK residence in the remainder of those 4 years.”

Officials also revealed (in the documents released after the Budget speech) that Overseas Workday Relief for the first 3 tax years of UK residence will be “retained and simplified”.

 
VAT registration threshold increase top
In a move designed to cut the burden of admin and the financial impact of VAT, the VAT registration threshold is to increase from £85,000 to £90,000 from April. Although this was not as high as some commentators had hoped, it is the first increase in 7 years and will bring “tens of thousands of businesses out of paying VAT altogether and encourage many more to invest and grow”, Mr Hunt told MPs.
 
Cut to property capital gains tax top
The higher rate of property capital gains tax is to be reduced from 28% to 24%.

The Government said that it had concluded, following a review of costs by the Treasury and the OBR, the change would increase revenues because there would be more transactions.

However, the lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.

On that point, the official Budget papers stated: “This will encourage landlords and second homeowners to sell their properties, making more available for a variety of buyers including those looking to get on the housing ladder for the first time, while also raising revenue over the forecast period.”

 
New British ISA and British Savings Bonds top
The Government will create a “British ISA” to encourage the public to invest exclusively in the UK. This will allow people to save an extra £5,000 tax-free per year by investing in UK equity. It will carry “all the tax advantages of other ISAs”.

This would be in addition to the £20,000 that can be subscribed into an ISA. The government will consult on the details.

Some commentators immediately raised doubts on the merits of the new ISA. They say that geographic diversity is key for having a diversified portfolio – being invested in a variety of markets around the world in case one falls short or even crashes. However, Mr Hunt said he had listened to calls from 200 professionals in the British stock market, who will see this as good news.

He also trailed a new British Savings Bonds. Watch this space for more news on that.

 
Chancellor takes ‘further steps’ on Full Expensing top
In a move he described as a tax cut for businesses, Mr Hunt confirmed the Government will introduce permanent Full Expensing. He said it was worth £10bn a year for companies.

A capital allowance tax scheme, the move enables businesses to write off 100% of the cost of investment on qualifying items such as new or improved technology, equipment, machinery or buildings.

Having announced it as a temporary measure in March 2023, the Treasury will shortly publish draft legislation for Full Expensing to apply to leased assets. This will be implemented “when fiscal conditions allow”, the Treasury said.

 
Furnished Holiday Lettings regime scrapped top
Tax breaks for second homeowners letting to holiday makers are to be axed. The Furnished Holiday Lettings regime is to be disbanded, Mr Hunt revealed. Currently, the tax breaks make it more profitable for second homeowners to let out their properties to holiday makers rather than to residential tenants to rent, raising concerns over the availability of long-term rental housing for local people. Multiple Dwellings Relief is also being abolished.
 
Oil companies windfall tax extended top
The UK’s windfall tax on the profits of oil and gas companies will be extended to 2029. Officially titled The Energy Profits Levy, it was introduced in 2022 to ensure that oil and gas producers in the UK “pay their fair share of tax from extraordinary profits”. The Government said the extension was motivated by the forecasts of gas prices to “remain abnormally high until at least 2028-29”. Mr Hunt told MPs it would raise a further £1.5bn.
Raising child benefit threshold top
The Chancellor revealed the High Income Child Benefit Charge (HICBC) threshold will rise. Instead of kicking in at a total adjusted income of £50,000, from April 2024 it will move up to £60,000. Also, the HICBC will increase at a lower rate, so instead of it being fully repaid at £60,000, from April 2024 it will be fully repaid at £80,000.

And a consultation is set to get underway on moving the charge to a household-based system in time to start by April 2026.

The Government said there was an unfairness in the current system – the fact it’s charged on an individual basis. The example it gave was two parents earning £49,000 each (with a household income of £98,000) wouldn’t reach the threshold, but a single parent earning over £50,000 would.

Childcare support expanded top
Further information was set out on plans to extend the 30-hour free childcare offer to all children of working parents from 9 months. Mr Hunt gave more details today, saying he would be guaranteeing rates paid to childcare providers. The impact of the plans overall will mean an extra 60,000 parents entering the workforce in the next four years, Mr Hunt said.
Fuel duty freeze extended top
A 5p cut to fuel duty will be maintained – with a freeze extended for another 12 months until February 2025. Mr Hunt said this will save the average motorist around £50 next year. It will also “bring total savings since the 5p cut was introduced to around £250”, Mr Hunt added.
Alcohol duty frozen until next year top
The Government will freeze alcohol duty from 1 August 2024 until 1 February 2025, lengthening the six-month freeze announced at Autumn Statement 2023, with the intention to “support the hospitality sector and help consumers with the cost of living”.
Pension pots for life top
There was a brief mention for the idea of giving people one ‘pension pot for life’. The Chancellor said the Government will continue to explore previously trailed plans, with a consultation already underway.

The reforms would give workers the right to nominate the pension scheme they want their employer to pay into, which it’s claimed could help solve the problem of lost pension pots as workers move jobs. He announced the plan in the Autumn Statement.

Tax credits for film industry to rise top
Some film studios are set to benefit from 40% gross business rates relief until 2034. The UK has become “Europe’s largest film and TV production centre”, Mr Hunt said, before announcing the rate of tax credit available to the industry will rise by 5%. Furthermore, an 80% cap for visual effects costs will be removed.

Orchestras, museums, galleries and theatres will also benefit from a permanent 45% tax relief for touring productions and 40% relief for non-touring productions. The UK’s creative industries will be backed by over £1 billion overall, the Treasury said.

Research and Development funding top
The Budget includes an additional £45 million to “accelerate medical research” into common diseases like cancer, dementia and epilepsy. It’s part of a £360 million package to support innovative R&D and manufacturing projects across the life sciences, automotive and aerospace sectors.

The Green Industries Growth Accelerator will be allocated an extra £120 million to build supply chains for offshore wind and carbon capture and storage, officials added.

New tax on vaping and tobacco duty rise top
A duty on vapes will be introduced from October 2026. Officials said the move was designed to “protect young people and children from the harm of vaping”. The existing tax on tobacco will increase, to maintain the “financial incentive to choose vaping over smoking”. This will raise a combined £1.3 billion by 2028/29.
Updates on the economy and Government spending top
Inflation
Inflation should fall below the 2% target set by the Government in a few months, according to the Office for Budget Responsibility report, Mr Hunt announced. When he came to office inflation was at 11%, he said, whilst the latest figures show that it is now at 4%. Mr Hunt told MPs: “We have turned the corner on inflation.”

Debt and borrowing figures announced
Following OBR forecasts back in 2022 that headline debt would rise to above 100% of GDP, the Chancellor updated the Commons on projections for the next five years.

The OBR now says it will fall in every year to just 94.3% by 2028-29.

Mr Hunt said: “Underlying debt, which excludes Bank of England debt, will be 91.7% in 2024-25 according to the OBR, then 92.8%, 93.2%, 93.2% before falling to 92.9% in 2028-29 with final year headroom against debt falling of £8.9bn.”

Growth figures revealed
MPs also heard the latest forecasts from the OBR on economic growth. These were:

2024 – 0.8%
2025 – 1.9%
2026 – 2%
2027 – 1.8%

Government spending
Day-to-day public spending will stay at 1% growth in real terms but “we are going to spend it better,” Mr Hunt pledged.

He added: “It’s not fair to ask taxpayers to pay for more when public service productivity has fallen. Nor would it be wise to reduce that funding given the pressures that public services face.”

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