Our Senior Tax Manager, Mark Rhynas, has carefully analysed the budget summary to highlight the key changes and their potential impact. Here's a summary of the key points:
National insurance contributions (NIC)
Following a cut for employees reducing the Employee NIC rate from 12% to 10% from 6th January 2024 it was announced that they are being cut from 10% to 8% from April - with savings of up to £450 a year. Combined with the overall reduction from 12% down to 8% this represents savings up to £900 a year.
Self-employed NI rates
Following on from Employee NIC a similar drop for those taxed under Self-employment will see a two percentage point drop as well.
The High Income Child Benefit Charge
Under the current system, it penalises households if only one parent earns above £50,000 a year. This is expected to move to a household-based system but won't be introduced until 2026.
The threshold will however rise to £60,000 from £50,000 from April in the meantime. The top of the taper where it is withdrawn fully is raised to £80,000.
British ISA
A new British ISA will allow a £5,000 annual investment into in UK businesses. It includes all the tax advantages of other ISAs and will be on top of the existing £20,000 allowances.
Property capital gains tax rate
It was announced that the higher rate will be reduced from 28% to 24%.
SDLT relief
For those who purchase more than one dwelling in a single transaction, known as Multiple Dwellings Relief, is being scrapped.
The furnished holiday lettings (FHL) regime
The FHL regime has been abolished because it created "a distortion meaning that there are not enough properties available for long term rental by local people".
If you have a FHL please get in touch with us if you would like to discuss how this could affect your tax moving forward.
The non-dom tax status
It is understood that the current regime will be abolished from 2025. It means foreign nationals who live in the UK, but are officially domiciled overseas, will no longer be able to avoid paying UK tax on their overseas income or capital gains.
A "simpler" residency-based system will arrive in 2025. More details on this to follow when the new system has been announced.
VAT
The VAT threshold has been increased to £90,000 from £85,000 from 01 April 2024.
According to the Chancellor around 28,000 businesses will benefit in 2024/25 from no longer requiring to be VAT registered as a result.
The VAT Deregistration Limit has been increased to £88,000 as a result.
Capital Allowances
Jeremy Hunt told MPs he would introduce 'draft legislation for full expensing to apply to leased assets as soon as cost efficient to do so'.
Full expensing provides 100% corporation tax relief for capital expenditure on plant and machinery, but currently only covers equipment purchased outright. This meant that any leased equipment could not benefit from the tax relief, with calls for an extension to leased kit ever since the full expensing rules were announced in the Autumn Statement.
Bringing leasing into full expensing will be a welcome development for businesses struggling with cashflow.
These changes reflect the government's efforts to stimulate economic growth, streamline tax systems, and support businesses in navigating the evolving landscape.
As we delve deeper into the specifics, our team are ready to assist you in understanding and adapting to these developments for optimal financial management.
For tailored guidance on how these changes may affect you or your business, contact us for a consultation.