Spring Budget Summary 2024
The Chancellor Jeremy Hunt delivered his ‘Budget for Long Term Growth’ on Wednesday 6 March 2024. His speech promised ‘more investment, more jobs, better public services and lower taxes’, together with tax breaks designed to boost the country’s film industry.
The package promises more than £1 billion in additional tax reliefs to creative industries over the next five years. Theatre, orchestras and museums were also singled out with extended rates of tax reliefs and the National Theatre received £26m for infrastructure upgrades.
The Chancellor announced a further two per cent cut to the national insurance rate for employees. From 6 April 2024, the Government will reduce the primary rate of Class 1 employee National Insurance Contributions (NICs) from 10 per cent to eight per cent, with similar cuts announced on class 4 contributions for the self-employed down to 6% from 8%. Chancellor Jeremy Hunt also confirmed his ambition to get rid of national insurance as a separate tax altogether, saying it was a penalty on work when compared to taxes on other forms of income.
Other tax breaks for consumers came with a continuing freeze on both vehicle fuel excise duty and alcohol duty. And savers will be able to invest an extra £5,000 each year without paying tax on any income or gains if they put the money into a new form of Individual Savings Account. The UK ISA allowance is in addition to the existing ISA allowance and will be a new tax-free product for people to invest in UK-focused assets.
Child Benefit administration will be overhauled with a move towards a household-based assessment to overcome the current anomalies that arise by the tapered reduction imposed once one tax payer earns over £50,000, where two tax payers can each earn up to the threshold. The new system is set to come online in April 2026, and meantime Chancellor Jeremy Hunt has announced an increase in the threshold to £60,000 from April, and in the taper, after which no child benefit is received, to £80,000.
Dinesh Raja, Managing Partner of Bowling & co Solicitors, commented “There were cutbacks too, including the abolition of furnished holiday letting relief and the multiple dwellings relief on Stamp Duty Land Tax and a change to Capital Gains tax on property disposals, which is designed to draw in more revenue.”
For those properties where Capital Gains tax (CGT) is due on part or all of the sale proceeds (i.e. property that has been let out, is a second home or developed for profit in some way), the higher rate of CGT goes down from 28% to 24% from April 2024.
Other properties in the firing line are furnished holiday lets. From April 2025 the tax benefit that advantages landlords who let short-term furnished holiday property over those who let residential properties to longer-term tenants will end, with draft legislation to be drawn up.
Opening with forecasts from the Office for Budget Responsibility (OBR), the Chancellor announced that inflation was predicted to fall below 2% in coming months, and that economic growth was forecast to be 0.8% this year, 1.9% in 2025 and 2.0% in 2026. GDP per capita is forecast to grow each year from 2025.
For business, after making full expensing permanent in November – a 100% first-year allowance for companies to claim a deduction from taxable profits for qualifying plant and machinery assets – the government now plans to extend full expensing to assets for leasing. Draft legislation will be drawn up and changes introduced “when fiscal conditions allow”, according to the Chancellor.
And for smaller businesses, from April the VAT registration threshold will increase to £90,000 and there will be an extension on the access to finance Recovery Loan Scheme, under a new name of the Growth Guarantee Scheme.
There were also a series of announcements for investment focused on technology – to both support the growth of the technology sector itself and also to improve public services through new tech adoption. As part of that, the NHS will receive the lion’s share with £3.4bn committed to overall administrative systems with the ambition of boosting efficiency and improving patient care.
And for so-called ‘non doms’, the government is abolishing the current tax regime for non-UK domiciled individuals who are resident in the UK. The present system allows them to only pay tax on money earned in the UK, so income and wealth from outside the UK is not taxed here. This is to be replaced from April 2025 so anyone tax resident in the UK for more than four years will pay UK tax on their foreign income and gains. The government also announced that it intends to move to a residence-based regime for Inheritance Tax (IHT) in due course.
More detail from the Government about the Spring Budget is available.
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