Chancellor Jeremy Hunt presented the much-anticipated Spring Budget to The House of Commons, showcasing the Government’s vision for tax and spending plans. Amidst speculation about tax cuts and innovative revenue streams, the focus remained on fostering hope, ensuring long-term economic growth, and reducing working taxes.
National Insurance Contributions:
In response to economic progress, the Spring Budget announced additional cuts to National Insurance Contributions. Effective April 6th 2024, Class 1 Employee National Insurance Contributions will drop from 10% to 8%, resulting in an annual saving of £450 for the average employee. Self-employed individuals will see a reduction in Class 4 Contributions from 8% to 6%, translating to a £350 annual saving.
VAT Registration Threshold Increase:
From April 1st, 2024, the VAT registration threshold will rise from £85,000 to £90,000, marking the first increase in seven years. This change will exempt thousands of businesses from mandatory VAT registration.
Child Benefit Changes:
Reforms to the high-income child benefit charge aim for a transition to a household-based system. Additionally, the high-income child benefit threshold will now start at £60,000, tapering to £80,000, providing relief for families.
Changes to furnished holiday lets, CGT and multiple dwelling relief:
Changes impacting landlords and property investors include the abolition of multiple dwellings relief for bulk property purchases, a reduction in the higher Capital Gains Tax rate on residential property from 28% to 24%, and the abolition of the Furnished Holiday Lettings Relief scheme from April 2025.
British ISAs Introduced:
Savers can rejoice with the introduction of a new British ISA scheme, allowing an annual investment of £5,000 in UK equity, complementing the existing £20,000 ISA allowance.
Expensing for Leased Assets:
Draft legislation is on the horizon to boost business investment by enabling full expensing for leased assets. The introduction of this legislation is contingent upon financial feasibility.
Fuel and Alcohol Duty Freeze:
Motorists will benefit from the continuation of the fuel duty freeze for a third year, maintaining the 5p cut. The freeze on alcohol duty, extended until February 2025, aims to reduce costs for establishments such as pubs, bars, restaurants, and nightclubs.
Other Key Measures:
– The non-domicile tax system will be abolished, replaced by a residency-based system from April 2025. The new system exempts foreign income for individuals in the UK during their first four years, followed by regular UK residence taxation.
– Extended repayment period for budgeting advance loans, abolition of the charge for debt relief orders.
– Additional tax credits and 40% tax relief for eligible creative studios in the UK.
– A £6 billion investment in the NHS productivity plan to reduce waiting times and improve services.
– Maintenance of planned growth in day-to-day spending at 1% in real terms.
– £100 million allocated for levelling up funding to support cultural and capital projects and community regeneration.
– £200 million extension of the recovery loan scheme to support small businesses and SMEs.
– Imposition of a new tax on vapes, an increase in tobacco duty, and higher taxes on non-economy flights.
Looking to unpick the 2024 budget?
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