6th March 2024
The Government announced it's "Spring Budget" yesterday with a few eye catching measures set to be introduced that will impact both personal and business taxes. Headlined by a National Insurance cut and a raising of the VAT threshold, below is a brief summary of the main announcements
Individuals:
The current personal tax thresholds, including the personal allowance, basic, and higher-rate thresholds for income tax, will remain unchanged until April 2028. Additionally, effective April 6, 2023, the additional rate threshold has been reduced from £150,000 to £125,140.
Adjustments in National Insurance Contributions: Legislation will be introduced to lower the main rate of Class 1 National Insurance contributions by 2 percentage points, from 10% to 8%, effective April 6, 2024. Furthermore, starting April 6, 2024, the primary rate of Class 4 National Insurance contributions for self-employed individuals will also decrease by 2 percentage points, from 8% to 6%.
Reduced Annual Exemption for Capital Gains Tax: Effective April 2024, the annual exemption amount for capital gains tax will decrease from £6,000 to £3,000. Moreover, individuals falling within the higher tax bracket will witness a reduction in the Capital Gains Tax (CGT) rate to 24% upon the disposal of residential properties.
Overhaul of Non-Dom Taxation: The government plans to eliminate the remittance basis of taxation for non-domiciled individuals, transitioning to a more straightforward residence-based system from April 6, 2025. Additionally, proposals include transitioning to a residence-based regime for inheritance tax, with a policy consultation and draft legislation anticipated later in the year.
Adjustments to High Income Child Benefit Charge Threshold: Legislation in the Spring Finance Bill 2024 will raise the starting threshold for the High Income Child Benefit Charge (HICBC) adjusted net income to £60,000, effective for the 2024-25 tax year. Moreover, a taper for incomes between £60,000 and £80,000 will be introduced, halving the HICBC rate for individuals within this income range.
Introduction of British ISA Investment Allowance: The UK government has announced the upcoming launch of the UK ISA, offering individuals a new savings avenue. With a proposed allowance of £5,000 in addition to the existing £20,000 annual limit, this initiative will facilitate tax-free investments within the UK following a consultation period from March 6, 2024, to June 6, 2024.
7. Introduction of a new duty on VAPE products
Businesses:
Accelerated Tax Relief for Leased Assets: The chancellor's recent announcement outlines plans for the implementation of full expensing tax relief for leased assets. This aims to bolster operational efficiency for businesses engaging in leasing activities. By facilitating access to cutting-edge equipment and machinery, the relief is anticipated to drive productivity enhancements. However, the exact commencement date remains pending
UK Independent Film Tax Credit: In the latest Spring Budget, the Chancellor unveiled the UK Independent Film Tax Credit (IFTC). Under this program, eligible films can leverage the enhanced Audio-Visual Expenditure Credit (AVEC), enabling them to claim up to 53% of qualifying expenditure. Productions commencing principal photography on or after April 1, 2024, qualify for this credit. Moreover, claims for expenditure incurred from April 1, 2024, onwards can be submitted starting April 1, 2025.
Continuation of Growth Guarantee Scheme: Replacing the existing Recovery Loan Scheme, the Growth Guarantee Scheme will be extended until June 2024. The scheme's terms will remain unchanged, offering lenders and businesses consistency and stability. It will continue to provide a 70% guarantee to participating lenders for loans up to £2 million issued to smaller businesses.
Adjustments to VAT Thresholds: Commencing April 1, 2024, the threshold for taxable turnover determining VAT registration requirements will increase from £85,000 to £90,000. Additionally, the threshold for taxable turnover, determining eligibility for deregistration, will rise from £83,000 to £88,000.
Phasing Out of Furnished Holiday Lettings (FHL) Regime: The government has outlined plans to abolish the Furnished Holiday Lettings (FHL) tax system starting April 2025. This move aims to eliminate tax advantages currently enjoyed by landlords leasing furnished holiday properties compared to those renting residential properties to long-term tenants.
The above is offered as a summary of the key points of the chancellors announcements and does not constitute any formal written advice. Should you wish to speak with us directly about any of the announcements, please do not hesitate to get in touch.