Chancellor Jeremy Hunt delivered his Spring Budget on 6 March with at least one eye on the General Election expected later this year, announcing well-trailed further cuts in National Insurance Contributions (NICs) for both employees and the self-employed.
The cuts in NICs (from 6 April 2024) follow on from the cuts made in the Autumn Statement 2023, and have been broadly welcomed as likely to boost employment. The Chancellor also reduced the higher rate of Capital Gains Tax on residential property disposals, and raised the threshold for VAT registration slightly to £90,000. He also announced a new ‘UK ISA’ allowance of £5,000 (although representations are likely to be made that this is an unnecessary complication given the number of different ISAs already available).
These cuts were mainly paid for by a series of tax raising measures, including: the abolition of the Furnished Holiday Lettings tax regime and Multiple Dwellings Relief, a new regime for non-doms, an increase in tobacco duty, and a new duty on vaping.
As the Institute of Fiscal Studies has noted, immediate, certain tax cuts are being offset by back-loaded, uncertain tax rises – with obvious risks for Government borrowing if the estimates of the revenue raised by the tax rises prove to be optimistic. The revenue from the new non-doms regime in particular is dependent on the behavioural response, which is difficult to predict.
The multi-year freezes to tax thresholds previously announced remain unchanged, and planned increases in public spending remain tight, despite obvious pressures on public services.
As usual, as well as covering the main changes announced yesterday, our summary includes some of the other measures recently announced. These include:
Personal and employment taxes
- Income Tax – the rates of income tax remain unchanged at 20%/40%/45%.
- Income Tax – the personal allowance and basic rate band are frozen until 2027/28.
- Income Tax – the threshold at which the 45% rate of income tax starts was lowered from £150,000 to £125,140 from 6 April 2023 and remains at £125,140 for 2024/25.
- Taxes on dividends – remain at current rates; confirmed that the Dividend Allowance (reduced to £1,000 from £2,000 from April 2023) falls again to £500 from April 2024.
- Pension tax limits – pensions Annual Allowance for 2024/25 will be £60,000; Lifetime Allowance scrapped from 2024/25 (as previously announced).
- High Income Child Benefit Charge – thresholds increased and move from individual basis to household basis proposed.
- Non-UK domiciled individuals – new regime from nom-doms.
- National Insurance Contributions – main rate of Class 1 NICs falls by a further 2% from 10% to 8% from 6 April 2024.
- National Insurance Contributions for the self-employed – main rate of Class 4 NICs falls to 6% from 6 April 2024.
- National Living Wage and National Minimum Wage.
Business Tax
- Corporation Tax – no changes to rates or limits.
- Capital allowances – ‘Full Expensing’ (100% First Year Allowance) for main rate plant & machinery (made permanent by Autumn Statement 2023) to be extended to leased assets.
- Furnished Holiday Lettings tax regime – abolished from April 2025.
- Research and Development – existing large company (RDEC) and SME schemes will be merged from 1 April 2024 (rate will be current RDEC rate of 20%), as previously announced.
Capital Taxes
- Capital Gains Tax annual exempt amount (which reduced to £6,000 from £12,3000 from April 2023) will fall again to £3,000 on 6 April 2024.
Other measures
- VAT registration and deregistration thresholds increased.
- SDLT changes include abolition of Multiple Dwellings Relief.
▶ Download our Spring Budget Summary (PDF)
If you have any questions regarding the information covered in this summary, or would like advice on a particular area, please get in touch with either your usual contact or any of the UNW Tax partners. Contact details can be found on the final page of this summary PDF.