Chancellor Jeremy Hunt delivered his Spring Budget on 6th March 2024, in what is likely the final opportunity for the government to lay out tax and spending plans before the next general election.
The speech outlined new tax measures, adjustments to existing taxes, and a series of economic policy changes. To provide a clear understanding of these developments, we’ve got some of the highlights to get you up to speed.
National Insurance Contributions (NICs)
The headline news from the Spring Budget was further cuts to National Insurance Contributions (NIC) of 2% each for employees and self-employed taxpayers.
The main rate of primary Class 1 NIC paid by employees on earnings between £12,570 and £50,270 per year will be cut from 10% to 8% from 6 April 2024. Combined with the 2% cut announced in the Autumn Statement 2023, this will save the average worker earning £35,400 over £900 a year.
Self-employed taxpayers will receive a further 2% reduction in Class 4 self-employed NIC, on top of the 1% cut announced at Autumn Statement 2023. This means that from 6 April 2024, the main rate of Class 4 NIC for the self-employed will now be reduced from 9% to 6%. Combined with the abolition of the requirement to pay Class 2, this will save an average self-employed person earning £28,000 around £650 a year.
VAT Registration Threshold Raised
The earnings threshold above which businesses must register for and start charging VAT has been increased.
Effective from 1 April 2024, the taxable turnover above which a business is required to register and account for VAT will be increased from £85,000 to £90,000. This is the first change to the VAT registration threshold since April 2017.
For businesses trading below the limits, the decision to register voluntarily, or deregister, will largely depend on whether the level of reclaimable input tax will exceed the cost and time of administering VAT. This includes compliance with Making Tax Digital for VAT. We can help you decide!
Furnished Holiday Lettings Regime Scrapped
Owners of furnished holiday lets will lose their entitlement to favourable income tax, capital gains tax and capital allowances as the FHL regime is abolished, to help improve the availability of housing for local people.
From 6 April 2025, short-term and long-term lets will be treated the same for tax purposes. This will eliminate the tax advantage currently enjoyed by landlords who let furnished properties to holidaymakers on a short-term basis.
As such, individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.
High Income Child Benefit Charge Threshold Increased
The threshold for earnings above which you have to pay back some or all of your child benefit will be increased from £50,000 to £60,000 from 6 April 2024, with a full overhaul of the regime promised in April 2026.
From that date, you’ll be charged 1% of your Child Benefit for every £200 of income that exceeds £60,000. This means that basic rate taxpayers, with earnings under £50,270, will not be liable for the HICBC and will no longer need to file self-assessment tax returns purely to pay the HICBC.
New ‘British ISA’ Announced
A new individual savings account (ISA) has been announced, aimed at supporting growth of UK companies and encouraging a culture of saving.
Currently, individuals can deposit up to £20,000 a year into an ISA. The proposal is to give savers an extra £5,000 allowance on top of that that can only be invested in UK-focused assets.
There is currently no timetable for when the new UK ISA will be available as the government is still consulting on the details. We’ll keep you updated on what you can expect when we know.
How Chorus Accounting Can Help You
As we move into Q2 2024, we’ll see some of these policies come into force, as well as a general election on the horizon this year. Here at Chorus Accounting, we are here to work alongside you and help you prosper, so please do get in touch at any time. Call 01202 332500 and one of the team will be happy to help.
