Spring Budget 2024

The Chancellor presented his spring budget, here is a summary of the few tax changes announced.

Tax Rate Headline Changes

For Employees – 2% reduction in national insurance to 8% from 6^th April 2024

For the Self employed – a further 2% reduction in national insurance to 6% from 6^th April 2024

For investors – a surprise reduction in rates of Capital Gains tax for sale of residential property – the basic rate remains at 18% but the higher rate is be reduced from 28% to 24% from 6^th April 2024

Tax Threshold changes.

Most thresholds are still frozen, maintaining a stealth tax by not keeping up with inflation.  Dividend allowances and Capital Gains tax allowance are still halving.

The High-Income Child Benefit Charge did however get a welcome threshold rise – this is the claw back of child benefit for the higher earner.

• The starting point for clawback is to rise from £50,000 to £60,000 from April 2024
• Currently the clawback is £1 per £100 earned, this is to change to £1 per £200 earned.
• Hence clawback is not total until income reaches £80,000.
• Additionally, plans have been announced for a further change from April 2026, to assess the clawback on household income rather than that of the higher earner – if HMRC can make it work by then.

The big surprise was an increase in the VAT registration threshold to £90,000 from 1^st April 2024, and the deregistration threshold to £88,000.

Changes for investors

There is to be a New UK ISA – £5,000pa can be invested into a UK ISA – specialising in investing in UK businesses; this is on top of the existing £20,000pa allowance for other ISA’s.

The Furnished Holiday Lettings regime is to be abolished from 6^th April 2025 – full details have still to be released, including anti forestalling rules applicable from budget day to stop owners creating unrealistic situations in order to reduce tax to the transition.  Such income has been treated as a trading business and it appears will in future be treated as an investment hence here are the benefits that we expect to be lost.

• Business treatment for capital gains tax
• Full loan interest deduction against profits
• Variable profit split
• Small business rates relief
• Business treatment for inheritance tax
• Profits count as pensionable earnings
• Capital allowances on asset purchases.

Multiple dwellings relief for stamp duty land tax is to be abolished 1^st June 2024

Other Changes of note

Non-Dom status – The current tax system based on domicile (home country) is to be replaced from April 2025 by one based solely on residency (where you live).  Those arriving in UK (not having been here for over 10 years) and living here for over 4 years are to be brought into standard UK rules.  For those 4 years there will be a new Foreign Income and gains (FIG) regime during which assets may be bought into the UK tax free.

New guidance on Grants on credit – effectively loans from HMRC for the payment of inheritance tax in order to obtain probate.

Independent Film Tax Credit – increased to 53%.

Cultural Tax Reliefs – rates varied but relief to be made permanent for Theatres, Orchestra, Museums & Galleries – note higher rates for Touring.

New guidance on tax relief for training, for the self employed – confirms this can include training to

• update existing skills,
• maintain pace with technology.
• keep up with changes in industry practice.
• obtain ancillary skills e.g. bookkeeping, marketing.

Although expected there were no new rules announced for

• Income Tax
• Double Cab Pickups

Inheritance