Jeremy Hunt, the Chancellor, has unveiled the contents of this year's Budget in the House of Commons. It was the last scheduled Budget before the next general election, which is expected to take place later this year.
We take a look at the main announcements.
Income Tax and NICs
Further 2% reduction in National Insurance Contributions
Fresh on the heels of the reduction in National Insurance Contributions announced in last year’s Autumn Statement, a further reduction was confirmed by the Chancellor.
Class 1 (primary) main rate of NIC reduced from 10% to 8% from 6 April 2024
Class 4 NIC reduced from 8% to 6% from 6 April 2024
High Income Child Benefit Charge
The income threshold at which HICBC starts to be charged is increased from £50,000 to £60,000 from 6 April 2024 and the rate at which the HICBC is charged will also be halved from 1% of the Child Benefit payment for every additional £100 earnt above the threshold, to 1% for every £200. This means Child Benefit will not be withdrawn in full until individuals earn £80,000 or higher.
Recognising the unfairness of basing the charge on the highest earner, rather than total household income, the government plans to administer the HICBC on a household rather than individual basis by April 2026. Look out for the consultation in due course.
Furnished Holiday Lettings regime abolished
To alleviate the strain of housing in coastal areas, the FHL regime will be abolished from April 2024 meaning short-term and long-term lets will be treated the same for tax purposes. Individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.
Non-domicile regime to be replaced from April 2025
Under the new regime, anyone who has been a tax resident in the UK for more than four years will pay UK tax on foreign income and gains, as is the case for other UK tax residents. The new regime will no longer rely on the remittance basis, removing a source of complexity that incentivises individuals to keep income and gains offshore in the current system.
Capital Gains Tax
Higher rate CGT on residential property to reduce
Rates for individuals taxed at the higher rate for gains on residential property not eligible for Private Residence Relief will reduce from 28% to 24% for 2024/25. The basic rate will remain at 18%.
VAT
VAT registration threshold to increase
Having not seen an increase for the past seven years, the VAT threshold was overdue an adjustment and will increase from £85,000 to £90,000 from 1 April 2024. The deregistration threshold will be set at £88,000.
Contact Us
Please contact us to find out how the above applies in your circumstances and how you can reduce your tax liabilities and maximise your tax efficiency.
Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
