Spring Budget Summary 2024
Today, the Chancellor Jeremy Hunt unveiled the 2024 Spring Budget. Hunt recognised that interest rates are still high. However, he emphasised that the latest budget is geared towards achieving “long-term growth.” Andrew Knott, Associate Director at Bevan Buckland LLP, summarises some of the initial key points to understand the implications.
National insurance
Jeremy Hunt confirmed a cut to the National Insurance Contribution rate from 10% to 8% from April 2024, in addition to the 2% cut announced in November 2023, saving the average employed worker £900 per year.
Furthermore, the rate for the self-employed will be lowered from 8% to 6%.
Income Tax
There was no comment around changes to any income tax rates and thresholds, so “fiscal drag” is set to continue for now.
Childcare and Child Benefit
Changes will be made in April 2026 to base the High Income Child Benefit Charge on total household income and not to solely assess the charge on the higher earner. Due to the complexity of introducing this, as an interim measure, the threshold will increase from £50,000 to £60,000 from 6 April 2024, and the amount received will not be repaid in full until one’s income exceeds £80,000.
For completeness, rates paid to nurseries to fund free childcare hours for parents of children aged nine months or older will continue for the next two years.
Capital Gains Tax on Properties
The government will reduce the higher capital gains tax rate on properties from 28% to 24% for disposals on or after 6 April 2024.
Furnished Holiday Lettings (FHLs)
The tax benefits associated with the “FHL” regime will be abolished starting April 2025. The key benefit this is likely aimed at is the restriction to interest relief that applies to long-term lets that do not currently apply to FHLs.
Other advantages, such as capital allowances and capital gains tax benefits (reduced rates, gift relief and rollover relief), will also be removed; however, the impact of inheritance tax business property relief is unclear.
The reduction in the capital gains tax regime is likely designed to incentivise landlords to offload such properties before the rules take effect.
VAT Registration Threshold
The VAT registration threshold will be increased from £85,000 to £90,000 from the start of April 2024.
Given that the VAT threshold has not increased in many years, this measure will not make a substantial difference to most businesses. The inherent problem of the threshold’s impact on growth for businesses around the VAT registration threshold will remain.
Savings ISA
A new British Individual Savings Account (ISA) will be introduced, allowing an additional £5,000 allowance for investments in UK equities on top of the existing ISA allowances. This announcement seeks to encourage investment in the UK economy.
