Spring Budget 2024 – key announcements
The spring budget 2024 was expected to be the event in which the Chancellor pulled all his rabbits out of the hat ahead of an election. Following quite an eventful Autumn Statement last year, it was less of an event, dampened by reduced fiscal headroom to play with.
Announcements today included the abolition of furnished holiday lettings relief and the non-dom tax status together with an increase of the VAT threshold. This probably gave the headway to reduce National Insurance by an additional 2%.
Some surprises included plans to reform the high-income child benefit charge, a reduction in the higher rate of capital gains tax for residential properties and the abolition of multiple dwellings relief. So perhaps the odd rabbit was pulled out after all.
What does the Spring Budget 2024 mean for your future plans?
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National Insurance reduced (again)
Cuts to National Insurance both for employees and the self employed were announced again, this follows similar reductions from January this year which were announced in last year’s Autumn Statement.
The main rate of primary Class 1 National Insurance contributions will be reduced by 2 percentage points from 10% to 8% from 6 April 2024. For the self-employed, the main rate of Class 4 National Insurance contributions will be reduced by 2 percentage point from 8% to 6% from 6 April 2024.
VAT thresholds increased
The chancellor announced that secondary legislation will be introduced, amending the VAT Act 199. Consequently, this will, increase VAT registration and deregistration thresholds.
However the increase will be minor, the taxable turnover threshold will increase from £85,000 to £90,000. The taxable turnover threshold for deregistration IS being increased from £83,000 to £88,000.
These changes are to be effective from 1 April 2024.
Higher rate of capital gains tax (CGT) on residential property disposals reduced
Taking effect from 6 April 2024, legislation will be introduced in the Spring Finance Bill 2024 reducing the higher rate of capital gains tax on the disposal of residential property from 28% to 24%. The lower rate remains at 18%. The Government claims that this will increase transactions and property disposals.
Furnished holiday lettings relief abolished
From April 2025 the Government is to abolish furnished holiday lettings relief. Draft legislation is to be published in due course, including an anti-forestalling rule.
The government claims this will eliminate the tax advantage for landlords who let out short term holiday lettings over those who let out residential properties on longer terms.
Multiple dwellings relief abolished in the Spring Budget 2024
From 1 June 2024, multiple dwellings relief (MDR) is to be abolished. This relief allows the rate of tax to be calculated taking into account the total consideration given for linked transactions. Multiple dwellings relief is available to a purchaser buying at least two dwellings in a single or linked transactions. This allows the purchaser to calculate tax due based on the average value of the assets purchased as opposed to their aggregate value.
For contracts exchanged on or before 6 March 2024, multiple dwelling relief will continue to apply, even when completion takes place on or after 1 June 2024. This is reliant to there being no variation of the contract following 6 March 2024.
This relief will still apply to those contracts substantially performed before 01. 06.2024. For linked transactions which include the purchase of dwellings both before and after the change, these pre and post change transactions will be treated as unlinked for the purposes of MDR.
Non-UK domicile tax rules to be overhauled
It was announced that the remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a residence-based regime from 6 April 2025.
Those individuals who opt into the new regime will not pay tax on foreign income and gains for their first four years of tax residence.
Overseas workday relief will be reformed with eligibility based on the new regime. The government has also confirmed its intention to move to a residence-based regime for IHT. Further details are to be available in due course.
High-income child benefit charge (HICBC) reform
The high-income child benefit charge (HICBC) adjusted net income threshold will increase to £60,000, from 6 April 2024.
Also, for individuals with income that is above £80,000, the tax charge will be equal the amount of the Child Benefit payment.
For those where income is between £60,000 and £80,000, the rate at which HICBC is charged is halved. This will equal 1% for each £200 of income that is more than £60,000.
Other announcements in the Spring Budget 2024 that may be of interest
- The introduction of a new UK ISA with its own allowance of £5,000 a year.
- Air passenger duty to be increased for flights other than economy, domestic and shortfall rates.
- The freezing of fuel duty rates for another year.
- The introduction of a new duty on vaping products (and a one off tobacco duty increase).
- A freeze of alcohol duty until 1 February 2025.
Summary of key allowances and reliefs
Key tax allowances and reliefs confirmed in Budget 2024, or previously announced, which take effect from April 2024 include:
- The Capital Gains Tax annual exemption amount is reduced to £3,000;
- Tax relief on dividend income is reduced to £500;
- The registration threshold for VAT is to increase to 90,000. The deregistration threshold FOR vat will increase from £83,000 to £88,000.
Tax thresholds being frozen include:
- Income tax personal allowance at £12,570;
- Higher rate threshold at £50,271
- Main National Insurance thresholds (The Class 1 primary threshold is £12,570 per year);
- Inheritance tax threshold at £325,000.
With an election on the horizon, many of the above measures may not make it into legislation, depending upon the timing of the election and the passing of the relevant bills. This will certainly lead to an interesting year ahead.
Contact Alexander & Co to discuss how the Spring Budget 2024 will affect your business
For further advice on any of the topics covered in this update, or to discuss any other business matters, please do not hesitate to contact Alexander & Co at info@alexander.co.uk or use the contact form on this page.
