Spring Budget 2024 - What was Announced?
The Spring 2024 UK Budget was presented to parliament on 6th March 2024 by Chancellor Jeremy Hunt. It introduced several changes to taxes and financial regulations which will significantly affect individuals, businesses, and the economy. This article explains these changes and their implications in a structured format, with a focus on the most impactful measures.
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National Insurance Contributions (NICs) Reduction
One of the main changes reported in the media before the official announcement was a cut to National Insurance contributions for millions of working people:
- For Employees: The main rate of Class 1 employee NICs will be cut from 10% to 8%, starting from 6 April 2024.
- For Self-Employed Individuals: The main rate of self-employed National Insurance will decrease from 9% to 6% from 6 April 2024.
- Abolition of Class 2 NICs: The requirement to pay Class 2 NICs will be discussed, likely leading to its total abolition, reducing the financial burden on self-employed individuals.
These changes aim to lower the tax burden on workers and stimulate economic activity by increasing disposable income.
Capital Gains Tax (CGT) and Property Measures
Significant revisions were also announced regarding Capital Gains Tax and property-related taxes:
- CGT for Residential Properties: From 6 April 2024, the higher rate of CGT on residential property disposals will decrease from 28% to 24%, while the lower rate remains at 18%. This move is intended to encourage property disposals and increase housing availability.
- Abolition of Furnished Holiday Lettings Regime: Set to take effect from 6 April 2025, this change aims to rectify incorrect and potentially abusive claims.
- Multiple Dwellings Relief: This relief in Stamp Duty Land Tax will be abolished from 1 June 2024, streamlining the tax and addressing misuse.
These adjustments are designed to stimulate the housing market and correct imbalances caused by previous tax reliefs.
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Support for Small Businesses
The budget introduced several measures aimed at supporting small and medium enterprises (SMEs):
- Business Rate Relief: A continuation of the 75% business rate relief for eligible retail, hospitality, and leisure properties for the 2024-25 tax year, representing a significant saving for affected businesses.
- VAT Registration Threshold: The threshold will increase from £85,000 to £90,000 from 1 April 2024, reducing the tax burden and aiding the growth of SMEs.
- Growth Guarantee Scheme: The extension of the Recovery Loan Scheme as the Growth Guarantee Scheme until the end of March 2026 will continue to provide financial support to SMEs.
These changes are intended to alleviate the financial pressures on small businesses and stimulate growth and development in the sector.
High Income Child Benefit Charge (HICBC) Reform
The reform of the HICBC will significantly impact families:
- Threshold Increase: From April 2024, the threshold for the HICBC will increase to £60,000, exempting 170,000 families from the charge.
- Rate Adjustment: The rate at which HICBC is charged will be halved, meaning Child Benefit is not fully withdrawn until individuals earn £80,000 or higher.
This reform aims to reduce the financial burden on middle-class families and provide additional support to those with children.
Other Notable Changes
- Fuel Duty and Alcohol Duty: The government is maintaining current rates, extending the temporary 5p cut in fuel duty and freezing alcohol duty, aiming to ease cost-of-living pressures.
- Inheritance Tax: Simplification of the process for personal representatives of estates, enhancing ease and efficiency.
- Investment in HMRC Digital Services: Aimed at improving taxpayer experiences and compliance from September 2025.
- Childcare Future Funding: An increase in the hourly rate for childcare providers, representing a significant investment in early years education.
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The Spring 2024 UK Budget has arrived during an unstable period for the ruling Conservative government. A general election has been all but confirmed for 2024, and several political commentators believe this budget marks the last before the British public goes to the polls. It remains to be seen whether these changes are simply a kneejerk reaction to low support for the current government or long-lasting policies designed to help the UK economy recover and help working people improve their lives.
Remember, for any complex tax matters or for personalised advice, it is a good idea to consult with a professional. You can contact Jack Ross Chartered Accountants at 0161 832 4451 or use the contact form below to book a free no-obligation introductory meeting with one of our tax advisors.