On 6 March the Chancellor delivered his spring budget 2024. Fair to say that despite the government being pleased with how the economy has performed against targets, they are being prudent with regards to any tax cuts. We take a look below at the main points announced.

Cut to National Insurance Contributions (NIC)

Not really a surprise this one as it was leaked days before the budget was delivered. The Chancellor announced a cut to the main rate of Class 1 employee NICs from 10% to 8% from‌‌‌ ‌‌6‌‌‌ ‌‌April 2024, and for the self-employed he took another 2% off the main rate of Class 4 NICs from 6‌‌‌ April‌‌‌ 2024 to make them 6%. He also announced that the government will consult later this year on the scrapping of Class 2 NICs (although remember from 6 April 2024 the only people paying these are those are those with profits less than £6,725 or those voluntarily doing so).

Change to the rules for non-UK domiciled individuals

This one was always going to get some sniggering due to Rishi Sunak’s wife being one such person who benefited from the old rules. From 6 April 2025 anyone who has been a UK tax resident for more than 4 years will pay UK tax on foreign income and gains just as other UK tax residents do. This scraps the remittance basis which meant that only income or gains generated outside the UK but remitted to the UK were caught.

High income Child Benefit Charge

Currently if one parent earns over £50,000 then child benefit claimed starts to be repayable, until £60,000 income when all of it has to be repaid. From 6 April 2024 this will be raised to £60,000 and only at the £80,000 point will all child benefit have been lost. The government has recognised the unfairness of the current scheme that two parents earning £49,000 each (so £98,000 of household income) can claim Child Benefit in full, but where one earns £80,000 and the other £18,000 (so still £98,000 of household income) then the whole of any child benefit claimed has to be repaid. They have said they plan to base it on the household income from April 2026.

VAT registration limit increased

It was announced that the current compulsory VAT registration limit will increase from £85,000 to £90,000 from 1 April 2024. The de-registration limit will also increase at the same time to £88,000.

Furnished Holiday Lettings (FHL) regime abolished

Currently FHLs are treated as a trade and so those operating these benefit from certain perks (like full tax relief on mortgage interest) that were not available to those letting properties on a long-term basis. From April 2025 the FHL regime is to be abolished and the letting results of these properties will be treated in the same way as non-FHL rental properties. The hope is this will help stop inflated house prices in coastal areas.

Residential property higher rate Capital Gains Tax to be reduced

At the moment those making a profit on the disposal of a residential property not eligible for Private Residents Relief incur capital gains tax at 28% on the profits. From 6 April 2024 this will reduce by 4% to 24%.

Other changes announced previously

From April 2024 there are some other changes coming in that were announced in previous budgets. These are:

Dividend allowance reduces from £1,000 to £500
Capital Gains Tax annual exemption (the amount you can have tax free from profits on disposal(s) in a tax year will reduce from £6,000 to £3,000.

The UK continues to have one of the most complicated tax systems in the world, so it is essential to have an accountant who is reviewing your position regularly to ensure you and your business are as tax efficient as possible whilst remaining compliant. At Veritons we dedicate the time throughout the engagement to review your tax position, not simply at the start. If your current advisors are not doing this, remember the cost of your accountant is not just what you pay them but also the price of any tax inefficiencies. If you’d like to hear more about how we operate, hit the button below and provide your details and we’ll be in touch very soon.

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