Spring Budget 2024

Yesterday the Chancellor Jeremy Hunt delivered his Spring Budget, in doing so declaring that the country has “turned a corner on inflation” and will “soon have turned the corner on growth”. Given the improving economic outlook, it is now possible to make cuts and introduce other measures to make the tax system fairer and simpler.  Below, we’ve summarised the key points that we think will be relevant to our clients, and information on all the measures announced can be found in the Spring Budget 2024 .

Key changes:

Starting with National Insurance, as widely reported before the announcement, from 6 April 2024 National Insurance is being cut for employees and sole traders.  Employee Class 1 NIC main rate will be reduced from 10% to 8% and for the sole-traders the class 4 NIC main rate will be reduced from 8% to 6%.  The thresholds for NIC will remain the same. 

The much-derided High Income Child Benefit Charge (HICBC) is being updated for the first time in more than 10 years.  From April 2024, the income threshold for HICBC increases from £50,000 to £60,000 and the HICBC rate is reduced to 1% of every £200 (currently £100) of earnings over the income threshold.  This means that the taper threshold (the point at which HICBC equals Child Benefit) is increased to £80,000.  Jeremy also mentioned that from April 2026 the liability to HICBC will be based on household income rather than the income of the highest earner. Details will be confirmed following a consultation.

In terms of VAT, the threshold that a business needs to register for VAT is going up for the first time in 7 years.  From 01/04/2024 the registration threshold will be £90,000 (from £85,000) and the deregistration threshold will increase to £88,000 (from £83,000)

The Furnished Holiday Let (FHL) regime, which gives favourable tax treatment to landlords of short-term holiday lettings, will be abolished from 6 April 2025, all property letting will be subject the same rules. 

The higher rate of capital gains tax (CGT) on residential property gains will be reduced from 28% to 24% from 6 April 2024. 

Stamp duty land tax, Multiple dwellings relief (MDR) will be abolished for transactions with an effective date on or after 1 June 2024.  MDR can be claimed for contracts exchanged on or before 6 March 2024 regardless of completion date.

The taxation of “Non Doms” is getting a complete overhaul.  The current regime will be abolished from 6 April 2025, and replaced with a new foreign income and gains (FIG) regime.  This will be residence based with people becoming UK tax resident after 10 years of non-residence being exempted from UK taxes on overseas income and gains for 4 tax years and thereafter being subject to UK taxes on worldwide income and gains.  There are various transitional provisions to mitigate the impact of the regime change.