With one eye on the economy and the other firmly on the impending General Election, the Chancellor of the Exchequer, Jeremy Hunt, delivered a Spring Budget which largely met expectation. Much of it had been leaked or trailed in advance, so there were few surprises.
The Chancellor conducted a delicate balancing act, easing the tax burden on earners and families with some headline grabbing measures, while introducing tax increases to cover their costs. We did not see any major changes in policy and the much-touted reduction in Inheritance Tax (IHT) failed to materialise.
From a raucous and longer-than-usual session in the House of Commons, we have highlighted key points and changes relating to personal financial planning:
- Inflation to fall – the Office for Budget Responsibility (OBR) forecasts inflation to fall to its 2% target in the next quarter, a year earlier than their November 2023 forecast.
- Further reductions to National Insurance Contributions (NIC) – matching a previous cut in January, the Chancellor announced the main class 1 NIC rate will drop from 10% to 8% in April 2024. The main rate of class 4 self-employed NICs will similarly reduce from 8% to 6%.
- The launch of the ‘British Savings’ – a new UK Individual Savings Account (ISA) will create an additional £5,000 allowance on top of the current £20,000 ISA limit to encourage increased investment in UK companies. In addition, a new fixed term British Savings Bond through the NS&I will be launched. At this stage it is not known when these will be brought into effect.
- The removal of Multiple Dwellings Relief – a bulk purchase relief in the stamp duty land tax will be abolished from 1 June 2024.
- Reduced higher rate of Capital Gains Tax (CGT) on residential property – from April 2024 this will be cut from 28% to 24%. The basic rate of CGT on residential property will remain at 18%.
- The Furnished Holiday Lets (FHL) regime will be abolished – to rebalance the tax treatment of holiday rentals compared to long-term lets, it will be removed from 6 April 2025.
- The High-Income Child-Benefit Charge (HICBC) will be reformed – the threshold increases to £60,000 from April 2024, while the rate at which the charge is levied will be halved, so that child benefit will not be fully withdrawn until an individual’s income reaches £80,000.
- Increase in the VAT registration for businesses – from 1 April 2024, the VAT registration and de-registration levels will be increased to £90,000 and £88,000 respectively.
- Changes to the ‘Non-dom’ tax regime – the current rules for UK residents whose permanent home is overseas will be replaced with new rules from April 2025. While it is recognised that there will be an election, we set out the proposed regime as it currently stands.
- Alcohol and fuel duties – they have both been frozen.
Please click here for a full summary of the Spring Budget, covering all announcements and the allowances for the year ahead.
If you would like to discuss any of the points raised in the Budget or your wider financial position, please call 020 7444 4030 or email us.
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