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Spring Budget 2024
During the Spring Budget, Jeremy Hunt made several announcements. We have summarised the main points below:
Income tax
From 06 April 2024 the primary rate of Employees Class 1 NIC will be cut from 10% to 8%, having been reduced from 12% to 10% since 06 January 2024.
From 06 April 2024 the primary rate of Class 4 NIC for the Self-Employed will be cut from 9% to 6%, an additional 2% from the 1% which was already announced in the November budget.
Class 2 NIC is to end on 05 April 2024, offering a saving of £3.45 per week to the self-employed.
Child benefit
The High-Income Child Benefit threshold will increase from £50,000 to £60,000, with full clawback of child benefit applying to individuals with an income of £80,000 or higher. There are plans to move the High-Income Child Benefit threshold to a household income scheme come April 2026.
VAT
There will be a £90,000 VAT registration threshold from 01 April 2024 (increased from the current £85,000) – this is likely to impact smaller businesses and may be worth considering for those who trade with consumers as their prices may be inflated due to the tax liability. However, if choosing to de-register, they will not be able to recover VAT on relevant expenditure.
Property income taxation
The Furnished Holiday Lettings regime will be abolished from 06 April 2025. Properties meeting the qualifying tests for Furnished Holiday Lets are taxed under special rules and can make use of a number of tax advantages such as:
- Plant and Machinery allowances on fixtures, furniture and equipment.
- Capital Gains Tax reliefs such as rollover relief and mitigating Capital Gains Tax on disposals.
- Avoiding finance and interest restrictions on loans and mortgages, applicable to other lets.
The stamp duty land tax multiple dwellings relief is to be abolished for transactions with an effective date on or after 1 June 2024.
Capital Gains Tax on sale of Residential Property
From 06 April 2024, the Chancellor has announced that the higher rate of Capital Gains Tax on sale of Residential Property will reduce from 28% to 24%.
Taxes for non-domiciled individuals (non-doms)
From April 2025 onwards, overseas income and gains will be exempt from UK tax for the first four years of residence. From year five onwards, non-doms will be taxed on worldwide income and gains in the same way as any other UK resident. Transitional measures will ease the change for existing non-doms.
Duty taxes
Alcohol duty will now remain frozen until February 2025.
Fuel duty will be frozen for another year until March 2025.
The Chancellor announced the introduction of a duty on vaping products in October 2026, and a one-off increase in tobacco duty at the same time.
Air passenger duty is due to increase for business and first-class travellers, with the higher rates coming into force from April 2025.
New UK ISA
There will be the introduction of a new UK ISA allowing an additional £5,000 investment (in addition to the current £20,000) in UK businesses. Consultation will continue until 06 June 2024, with further details to be published in due course.
Updated: 11th March 2024
National Insurance Rates
In the Autumn Statement, the government announced changes to the rates of National Insurance.
For Employees – From 06 January 2024 – Employees Class 1 NI would be cut from 12% to 10%
For the Self-Employed – From 06 April 2024 – Class 2 NI will be removed & Class 4 NI will be reduced from 9% to 8%
Updated: 22nd February 2024
Dividend Tax Rates
From April 2023 the tax-free dividend allowance will be reduced from £2,000 to £1,000 and set to reduce further to £500 from April 2024. Dividend tax rates are due to remain the same as for 2022/23 and for April 2023 are as follows:
Basic Rates – 8.75%
Higher Rates – 33.75%
Additional Rates – 39.35%
It’s important for owner manager business to consider tax planning to ensure that they are aware of the tax which will apply to their drawings and consider a tax efficient plan for their drawings.
Corporation Tax
From 1st April 2015 to 31st March 2023 a single rate of Corporation Tax applied to all companies. With effect from 1st April 2023, HMRC have introduced a tier system for calculating the rate of tax which will apply to the profits of a limited company. If your limited company made more than £250,000 from this date you should expect to pay 25% Corporation Tax. A ‘small profits rate’ of 19% applies to business which make less than £50,000 in profits. Marginal relief is provided for companies with profits between £50,000 and £250,000.
It’s increasingly important for limited companies to be aware of the allowable expenses which they may claim through their business in order to ensure that they are not paying a higher percentage of their profits as Corporation Tax.
Capital Gains Tax
Capital Gains Tax applies to the profit which you make when disposing of an asset that has increased in value. From 6th April 2023, HMRC reduced the Annual Exemption for tax-free gains, from £12,300 to £6,000. Certain Assets and transfers are exempt from Capital Gains Tax. Capital Gains Tax will be due at 10%/20% if you are in the basic/higher rates respectively. On residential property Capital Gains Tax will be due at 18/28 % if you are in the basic/higher rates respectively.
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