In what was widely regarded as the last Budget before the next general election, the preceding media speculation focused on the potential tax breaks Jeremy Hunt might offer up with a view to winning over voters.
The main headline was a further reduction to National Insurance, which will be welcomed by an estimated 29 million people in work. We cover this, and the other key announcements below.
Key Personal and Capital Gains Tax Announcements
Employee NIC – To be cut by 2% from April 2024. This is on top of a recent cut of 2% that took place in January this year. The new rate will be 8% from April 2024 onwards.
For someone on a £30,000 salary each of these 2% cuts is worth around £350 a year, so the total 4% cut is worth around £700. Those on higher salaries will save more, although savings are maximised for those on salaries of £50,270 or above.
Self Employed NIC – To be cut by 3% from April 2024. Previously a 1% cut had been planned from April 2024 which was boosted to 3% in this budget. The new rate will be 6% from April 2024 onwards.
It was already planned that, from April 2024, the fixed-rate weekly Self Employed NIC will be abolished which will save a further £180 per year. With both of these changes, someone with £30,000 profits will pay around £700 less NIC per year. Those with higher profits will save more, although savings are maximised for those with profits of £50,270 or above.
Child Benefit Charge – Those with higher earnings lose entitlement to Child Benefit. Currently, the range when this applies is between £50,000 to £60,000. This is being changed to between £60,000 and £80,000 from April 2024. The government is considering changing the way this is assessed from ‘highest earner’ to ‘household income’ but this would be from April 2026 at the earliest.
Residential Capital Gains Tax – The highest rate for gains on residential properties is currently 28%. This is being cut to 24% from April 2024.
Key Business Tax Announcements
VAT Threshold – From April 2024 the registration threshold increased from £85,000 to £90,000. The deregistration threshold will also increase to £88,000.
Capital Allowances Full Expensing – Government to consider extending the Full Expensing rules to apply to leased assets.
Other Announcements
Furnished Holiday Lets (FHLs) – Special classification of FHLs to be abolished from April 2025, bringing them in line with other rental properties.
A new UK ISA – Plans for additional £5,000 a year allowance if making certain UK based investments. Start date not yet confirmed.
Stamp Duty – Abolition of Multiple Dwellings Relief from June 2024.
Non-Dom tax Status – Reform of the tax breaks currently available to Non-Doms. Changes planned to take effect from April 2025.
Vapes and business class flights – New taxes to be announced.
Household Support Fund – Has been extended for six months.
Alcohol Duty – Freeze extended until February 2025.
Fuel duty – 5p cut has been extended a further 12 months.
What didn’t change?
The most notable-by-their-absence items were inflationary changes to tax allowances and rate bands. In particular, the personal allowance remained frozen for the fourth year in a row. Ten tax years previously, in 2014/15, it was increased to £10,000, and has only crept up since. The inheritance tax threshold, of £325,000, remains frozen for the 15th year in a row.
While the 2024 budget did make the headlines it was looking for in terms of tax cuts for individuals, plenty of media outlets continued to criticise the government’s use of fiscal drag to increase treasury revenues as inflation brings more people into tax, and into higher tax brackets.
If you would like more detail as to how the 2024 Budget might affect you, or your business, please contact your Relationship Partner or our Tax Manager, James May on 01482 888 820.