2024 Spring Budget – What Does That Mean For You?
The Spring Budget for 2024 has introduced a series of significant changes that are poised to impact businesses across various sectors. Presented by Chancellor Jeremy Hunt, the budget focuses on fostering long-term growth, with specific measures aimed at tax reforms, investment in innovation, and modifications in National Insurance Contributions (NIC), among others.
We have put some of the key points together for you:
National Insurance Contribution (NIC) rates
The main rate of Class 1 employee NICs will see a reduction by 2p from 10% to 8% starting from 6 April 2024. This is in addition to the previous cut announced at the Autumn Statement 2023. Similarly, for the self-employed, Class 4 NICs will be reduced by 3p from 9% to 6% from 6 April 2024. These changes are anticipated to try to alleviate some of the tax burden on employees and self-employed individuals, potentially encouraging employment and entrepreneurial activities. Additionally, the government plans to consult on abolishing Class 2 National Insurance, further easing the financial obligations of the self-employed.
Child Benefit Changes
The government announced an increase in the threshold for the High-Income Child Benefit from £50,000 to £60,000 starting from 6 April 2024. Furthermore, a tapered charge will apply for incomes between £60,000 and £80,000. Additionally, there is a proposal to shift to a household-based system, rather than the current individual income-based system, by April 2026. This reform is designed to make the Child Benefit system more equitable and reflect modern family financial dynamics more accurately. The move to a household-based assessment could potentially offer more families access to Child Benefit, acknowledging the combined financial contributions within households.
VAT Threshold Changes
In a bid to reduce the administrative burden on small businesses and align with inflationary pressures, the government has decided to increase the VAT registration threshold from £85,000 to £90,000. Similarly, the deregistration threshold will rise to £88,000. These changes, effective from 1 April 2024, mark a significant adjustment aimed at supporting small and medium-sized enterprises (SMEs) by allowing more of them to stay outside the VAT system. This increase in the VAT threshold is anticipated to benefit thousands of businesses across the UK, enabling them to focus more resources on growth and operational efficiency.
Tax Regime Changes for Non-UK Domiciled Individuals
The budget outlines a transition from the current tax system for non-UK domiciled individuals to a residence-based regime, starting from 6 April 2025. This reform aims to simplify tax obligations for individual’s resident in the UK for more than four years, affecting businesses with globally mobile employees.
Business Tax Reforms
The budget introduces various measures to stimulate investment and productivity across industries. Notably, the extension of full expensing for qualifying plant and machinery investments to include assets for leasing when fiscal conditions permit, demonstrates a commitment to enhancing business investment.
Creative Industry Incentives
Over £1 billion in new tax reliefs for the UK’s creative industries underscore the government’s recognition of the sector’s contribution to economic growth and job creation.
Capital Gains Tax
The government will reduce the higher rate of Capital Gains Tax on residential properties from 28% to 24% from 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.
UK ISA and British Savings Bonds
The government has unveiled the launch of a new UK ISA and British Savings Bonds. This UK ISA introduces a £5,000 allowance in addition to the current ISA limit, offering a tax-exempt investment option dedicated to UK-based assets. The British Savings Bonds, set to roll out in April 2024 through National Savings and Investments, will provide a secure option with a guaranteed interest rate, fixed for three years, increasing the savings opportunities available to consumers.
HMRC Digital Services
The government is set to enhance and streamline the digital services offered by HMRC, aiming to facilitate the process for Income Tax Self-Assessment taxpayers who wish to pay their taxes in instalments. These improvements are scheduled to be in place by September 2025.
IHT Administrative Reform
Regarding reforms in Inheritance Tax (IHT) administration, starting from 1 April 2024, personal representatives managing estates will not be required to secure commercial loans for paying inheritance tax prior to applying for a “grant on credit” from HMRC.
Furnished holiday lettings
The government has also announced that it will abolish the Furnished Holiday Lettings tax regime from 6 April 2025.
Overall, the 2024 Spring Budget is designed to try and stimulate economic growth, encourage investment, and provide tax relief to individuals and businesses.
While these policies aim to address immediate economic challenges, their long-term impact on the UK’s business landscape and global competitiveness remains to be seen. Businesses are encouraged to review these changes carefully and consider their implications for strategic planning and operations.
To read the changes in full, please follow this link https://www.gov.uk/government/topical-events/spring-budget-2024
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