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You are here: News » Archived News » Spring Budget tax summary for businesses, individuals and property owners

Spring Budget tax summary for businesses, individuals and property owners

Spring Budget

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Chancellor Jeremy Hunt has presented this year’s Budget in the House of Commons, marking the final scheduled Budget before the upcoming general election, expected later this year. As the nation prepares for this pivotal political event alongside the ongoing economic recovery, the Spring Budget presents a crucial opportunity to set the fiscal direction for the future, reflecting the government’s commitment to fostering economic growth, supporting businesses, and ensuring a fair and sustainable tax system for individuals. Here’s our summary of the key tax points.

Summary for businesses (employers):

Full expensing for capital allowances: Capital allowances will be extended to leased assets, allowing businesses to fully expense these assets. This move aims to incentivise investment and boost business productivity.

VAT registration threshold increase: The VAT registration threshold will increase to £90,000 from £85,000. The deregistration threshold has also increased to £88,000 (from £83,000). This adjustment aims to reduce the compliance burden on small businesses and provide them with more flexibility in managing their finances.

Reduction in national insurance contributions (NICs): In last year’s Autumn Statement there was a reduction in employee’s national insurance, dropping from 12% to 10%, effective as of 6 January 2024. Building on this, the recent Spring Budget introduced a further decrease of 2% lowering the rate to 8% starting from 6 April 2024. For those considering staff bonuses in their March payroll, it might be worth exploring the option of deferring these payments to April. This strategic move allows employees to take advantage of the reduced national insurance rate, ultimately allowing them to retain more of their bonus.

It’s important to note, however, that this reduction exclusively impacts the national insurance rate paid by employees. The employer’s national insurance rate remains unaffected at 13.8% for wages exceeding £9,100 annually (£175 per week).

On a separate note, eligible employers can continue to claim the employment allowance in the fiscal year 2024/25, providing a reduction of up to £5,000 per year on their overall National Insurance liability.

Summary for individuals

Reduction in national insurance contributions (NICs) for the self-employed: The Spring Budget has extended the national insurance cuts initially introduced in last year’s Autumn Statement. Effective from 6 April 2024, the rate of class 4 national insurance, which is factored into your tax bill at year-end, has been further reduced from 9% to 6% for profits ranging between £12,570 and £50,270, while the rate for profits exceeding £50,270 will remain at 2%. For instance, if your trade profits for the 2024/25 tax year amount to £50,000, this rate reduction could lead to a saving of £1,302 compared to the previous tax year. However, the impact of this saving won’t be felt until you settle your 2024/25 self-assessment balancing payment by 31 January 2026. Additionally, as previously announced in last year’s Autumn Statement and reaffirmed in the Spring Budget, class 2 national insurance will effectively be abolished, resulting in a yearly saving of £179.40.

Increase in high-income child benefit charge threshold: The high-income Child Benefit charge threshold will increase to £60,000 from £50,000. Furthermore, the High Income Child Benefit Charge (HICBC) will now be calculated at a rate of 1% of the child benefit received for every £200 of income above the threshold. This represents a slower rate of clawback compared to the previous tax year of 2023/24, resulting in child benefit being fully clawed back only when income exceeds £80,000. Additionally, Chancellor Jeremy Hunt announced intentions to alter the HICBC so that it is based on household income rather than individual income. This adjustment is anticipated to be implemented by April 2026.

Abolition of non-domiciled individuals regime: The non-domiciled individuals’ regime will be abolished and replaced with a simpler phased-in system for new arrivals for the first four years. Those who continue to reside in the UK beyond this period will be taxed on their worldwide income.

Summary for property owners and landlords:

Abolition of furnished holiday lettings tax regime: The tax regime favourable to furnished holiday lettings is set to be abolished from 6 April 2025, meaning your profits from holiday lets will be subject to the same tax regulations as other rental properties, potentially resulting in an increased tax liability if your holiday let income remains the same. This change will likely impact businesses operating in the short-term rental sector. If you decide to sell your holiday let after 6 April 2025, you won’t benefit from Business Asset Disposal Relief, which offers a favourable 10% capital gains tax rate. Measures will be implemented from 6 March 2024 (the day of the Budget announcement) to prevent tax planning strategies aimed at manipulating the sale date of a holiday let to appear before 6 April 2025.

Abolition of stamp duty relief for multiple dwellings: Stamp duty relief for multiple dwellings will be abolished. This change may impact individuals involved in property transactions, particularly those purchasing multiple properties.

Reduction in capital gains tax (CGT) higher rate: The Spring Budget introduced a couple of changes to capital gains tax (CGT) allowances and tax rates, which are particularly noteworthy for individuals who own residential property in addition to their primary residence.

Annual Exemption: The CGT annual exemption, representing the amount of capital gain that can be realised without incurring tax, is being reduced for the 2024/25 tax year to £3,000, down from the current £6,000. If you’re contemplating the sale of any capital assets (and have the flexibility to do so before 6 April), it may be prudent to consider the timing.

Rates: The main CGT rates remain at 10% if your gains fall within your unused basic rate band or if you’re disposing of a qualifying business eligible for Business Asset Disposal Relief. Starting from 6 April 2024, the CGT rate for residential property remains at 18% for gains within your unused basic rate band, but it will decrease to 24% (from the previous 28%) for gains exceeding an individual’s basic rate tax band.

If you need bespoke advice as a result of the Chancellor’s Spring Budget 2024, or have any other corporate or personal tax issues you would like to discuss, please contact a member of our team – we’re here to help.

Call 0161 905 1801 in South Manchester or on 01925 830 830 in Warrington, or email mail@lwaltd.com

Les Leavitt, Leavitt Walmsley Associates Chartered Certified Accountants

Les Leavitt, Leavitt Walmsley Associates
Les Leavitt, Leavitt Walmsley Associates

lwaltd.com

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