It was not an exciting, surprise-packed budget. However, the budget did bring some good news for many while leaving other areas unmentioned.
My top seven ‘headlines’ from this year’s budget are:
1. National Insurance Contributions
Class 1 employee national insurance contributions (NICs) are to be cut from 10% to 8% from 6 April 2024. There is a corresponding cut from 8% to 6% in class 4 NICs for the self-employed. To put this into context an employed person earning £100,000 will be £126pm/£1512pa better off as a consequence of this latest cut in NICs compared to before both of the Chancellor’s NIC reductions (the first taking effect from January 2024 and the second from April 2024).
Why not check your own position using The Money Saving Expert’s income tax calculator?
2. Child Benefit
The thorny issue of the high-income child benefit charge (HICBC) was on the agenda. The threshold for losing the benefit will rise from £50,000 to £60,000 from April 2024. Also, the rate at which the HICBC is charged will be cut in half. This equates to a 1% loss for every £200 of income more than £60,000, meaning that only after your individual income reaches £80,000 will your benefit be totally lost. The increased threshold of £60,000 could mean two working parents could both earn £59,999 with no loss of Child benefit at all.
However more meaningfully, from April 2026, the HICBC will apply to household income rather than the individual. After this date, if the total earnings between both parents is over the threshold you will be liable for the HICBC. I would hope the threshold would rise at this time but it has not been mentioned at all.
So in the short term, until April 2026, there is an improvement but in the long term, this could mean more families could be caught by the HICBC. We will be monitoring this one with interest in the coming 2 years.
Please refer to the government website for more details
3. ISAs
There is a change to ISA arrangements. There will be a UK ISA, which you could invest in UK shares or other UK-oriented investments with a subscription limit of £5,000. This is in addition to the current £20,000 individual ISA allowance and Junior ISAs and Child Trust funds of £9,000 p.a. tax year. No other details are confirmed, but we will update you once we know more.
4. Capital Gains Tax
There will be a reduction in the higher rate of capital gains tax (CGT) on the disposal of property that is not exempt as your primary residence. It will reduce from 28% to 24% from 6 April 2024.
5. Holiday Lettings Tax
The furnished holiday lettings tax regime will be abolished from 6 April 2025. This will eliminate the tax advantage for landlords who let out short-term furnished holiday properties, such as AirBnB, over those who let out residential properties to longer-term tenants.
6. VAT
The Value Added Tax (VAT) registration threshold will rise from £85,000 to £90,000 from 1 April 2024. The deregistration threshold will rise from £83,000 to £88,000.
7. Non-UK Domicile Rule
The non-UK domicile rules will be replaced from 6 April 2025 with a regime based on residence time.
What was missing?
Notable omissions are any changes to inheritance tax and pensions legislation. With one more budget being mooted before the election, could these be tackled next time? We will wait and see….
For greater detail on the above points please see Spring Budget 2024 – GOV.UK (www.gov.uk).
To understand what this all means for you, get in touch with your Legal & Medical Adviser.
This article is based on our understanding of the details of the March 2024 Budget at the time of writing.