The Spring Budget 2024 has been touted for some time to offer tax cuts in advance of an Election within the next 12 months and lived up to expectation. The extensions of fuel and alcohol duty freezes for 12 months backing this up. There were relatively few measures for businesses, the focus of cuts being on individuals who are the voters.
Measures for individuals
- The headline announcement was the 2% reduction in employees NI for employees (10% to 8%) and self employed (8% to 6%) affecting earnings between £12.5k and the £50k higher rate threshold. For earnings of say £32.5k this will save each category £400pa
- The high income child benefit charge which recoups child benefit for any taxpayer within the household earning more than £50k has been highlighted as unfair for several years and is changing next year:
- The starting point will be raised to £60k and only recouped over earnings to £80k increasing the taper from £10k to £20k
- From 2026 a new whole household assessment will be made but this will mean HMRC linking up tax records hence the delay
- Capital gains tax rates on property sales is being reduced from today for higher rate incomes from 28% to 24%, this will apparently raise more tax revenue as it was creating inflexibility in the market
- A new ISA is to be introduced which will add £5k to the annual allowance providing the investment is in UK companies
- Fuel duty is to be frozen for another 12 months
- Alcohol duty freeze to be extended to February 2025 “backing the great British pub”
Other measures for individuals
- The measures to treat furnished holiday lettings as a business and therefore more beneficial than letting to individuals to be abolished making it easier for local residents to rent rather than holidaymakers
- The current non-domiciled tax system is to be abolished with a fairer system where 5 years after moving to the UK they will be taxed the same as a UK resident
- Excise duty on vaping to be introduced from 2026 and at the same time a further increase in tobacco excise will be introduced
For business
- There was a lot of emphasis on encouraging investment for larger businesses, in particular to attract companies to work and invest in the UK
- Full expensing of leased assets to be introduced when there is headroom in national finances
- VAT registration limit is to be increased from £85k to £90k
Other announcements
- Headline inflation set to fall below the 2% target within a few months according to the Office for Budgetary responsibility
- The oil and gas levy on energy producers to be extended to 2029 due to the high prices resulting from the Ukrainian conflict
- Funding for improvements in NHS productivity to be met in full by the government
- Tax reliefs for theatre, orchestras, museums and galleries introduced during Covid to be made permanent
- Tax credits increased for visual effects costs to further grow the British film industry
The Spring Budget 2024 seemed very focused on individuals who will of course be voting in the forthcoming election, but it does seem the Chancellor listens to public opinion in particular regarding the High Income Child Benefit Charge! Further details will be released over the next few weeks and you should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Shrewsbury, Shropshire – Accountants who “speak your language”