Spring Budget 2024

8 months, 2 weeks ago by Oliver Atkinson

The chancellor of the exchequer, Jeremy Hunt, has delivered his spring budget which he describes as a ‘budget for long term growth’. The government claims that this budget accompanied with the Autumn statement last year, will put back £900 into the average worker’s pocket. The key policy announcements include the following:

National Insurance

A further 2p cut from the main rate of national insurance will come into effect from April 2024, this is in addition to the decrease in NI rates from the Autumn statement, which also included a 2p cut. Together with the cut to Employee National Insurance at the Autumn Statement, this slashes the main rate of Employee NICs by a third and means the average worker earning £35,400 a year will be over £900 better off this year.

The Chancellor also went further with tax cuts for the self-employed, having reduced Class 4 NICs from 9% to 8% and abolished the requirement to pay Class 2 NICs at Autumn Statement. Today he announced a further 2p cut to Class 4 NICs for the self-employed to 6%, meaning the average worker earning £28,000 will be £650 better off compared with last year.

Child Benefit

The threshold at which individuals will start to repay their child benefit has also been increased from £50,000 to £60,000. The government suggests that 170,000 families will no longer need to repay their child benefit due to this uplift. For the 2024/25 tax year, the high-income benefit charge will be a tapered charge between £60,000 to £80,000. The chancellor also mentioned that they will consult to change the calculation to a household system rather than based on individual system to become fairer.

Capital Gains Tax

The higher rate of capital gains tax has also been cut in a surprise move. Currently, higher and additional rate taxpayers will pay 28% capital gains tax on residential properties, however, this has been lowered to 24%. The rationale behind this move is that it will create more transactions which will boost the governments takings.

Furnished holiday lettings

The furnished holiday lettings regime has been abolished by the government. The intention of this is to remove the current tax advantage for landlords who let short term furnished holiday properties over those who let out residential properties to longer term tenants. With FHL, landlords can fully claim interest incurred on borrowing, claim more beneficial capital allowance rules and other various capital gains relief (BADR, rollover relief or gift hold-over relief).

Non-domiciled individuals

The government will also abolish the current tax regime for non-dom individuals and replace the tax system with a residence-based regime. Non-doms are UK residents deemed to have a permanent home outside Britain. The regime allows people domiciled abroad to pay tax in the UK on only their UK income and capital gains.

From April 2025, anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, regardless of their domicile status. New arrivals will still receive a 4 year relief, as long as they have not been a UK resident in the previous 10 years.

UK ISA

The chancellor also unveiled the UK ISA, this will allow individuals to invest a further £5,000 annual investment into UK equities, this is on top of the current £20,000 allowance per tax year.

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