The Chancellor has announced that there is good news for the economy, with the Office for Budget Responsibility (OBR) confirming that inflation is currently at 4% and is likely to reduce below the Governments target of 2% in the next few months.
With the previous Budget announcements for business there was perhaps little room left to make many further changes, albeit there would be announcements on further consultations.
Here is a summary of the main changes affecting individuals:
Class 1 National Insurance
A fresh cut to primary Class 1 National Insurance contributions for employees from 6 April 2024, reducing the current rate by 2 percentage points from 10% to 8%. This is a measure that is targeted at workers (and is cheaper for the Chancellor than an Income Tax cut) and will be worth around £450 a year for someone on an average salary.
Class 4 National Insurance
Cuts to Class 4 National Insurance contributions for self-employed individuals or partners of partnerships from 6 April 2024, reducing the rate by 3 percentage points from the current 9% to 6%.
High Income Child Benefit Charge
The High Income Child Benefit Charge, which currently affects parents where one individual's income exceeds £50k, will be revisited so that the charge applies to collective household income. This is proposed to be introduced by April 2026 but, in the meantime, the threshold will go up to £60k, and the top of the taper at which it is withdrawn will go up to £80k (from the current £60k). Effectively the rate at which this is charged will be halved from 1% of the child benefit payment for every £100 of income above the threshold, to 1% for every £200.
Capital Gains Tax
The higher rate of Capital Gains Tax on residential property disposals will be reduced from 28% to 24% with effect from 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual's basic rate band. The chancellor anticipates that the lower tax rates will lead to more tax revenue due to a higher number of transactions.
If you are selling a residential property postponing the sale to post 5 April may save some tax, but also take into account the reduction of the annual exemption to £3,000.
Non-UK domicile tax rules
Replacement of the non-UK domicile tax rules with a residence-based regime in an attempt to introduce a system that is both fairer and competitive with other countries. From April 2025, new arrivals in the UK won't be required to pay any tax on foreign income for the first four years of residence but after then, if they still live in the UK, they'll pay the same tax as other UK residents. Overseas Workday Relief will also be reformed alongside.
Property
Abolition of the furnished holiday lettings regime with effect from April 2025, scrapping tax breaks which make it more profitable for second home owners to let out their properties to holiday makers rather than to long-term tenants to rent. Draft legislation will include an anti-forestalling rule which will apply from 6 March 2024.
UK ISA (Individual Savings Account)
Consultation on the introduction of a brand new UK ISA which will allow an additional £5,000 annual investment for investments in UK equity with all the tax advantages of other ISAs. This will be on top of the existing ISA allowances.
British Savings Bonds
National Savings & Investments (NS&I) will launch 'British Savings Bonds' in April 2024. This product will offer a guaranteed interest rate on deposits of between £500 and £1 million, fixed for three years - though we don't yet know what that rate will be.
Some of these items will depend on the outcome of the next general election, but for now, software companies have their work cut out to get software updated prior to 6 April.
Please click here to read Whitings LLP full 2024 Spring Budget Summary »If you would like to discuss any of these points, please do not hesitate to get in touch with us
