Chancellor Jeremy Hunt unveiled his Spring Budget earlier today (6th March 2024), with viewers watching keenly to learn about the Conservatives plans in their last budget before the upcoming general election.
Tax cuts directed towards the working population, encouraging investment into the UK economy and help for families, were all on the agenda at today’s budget speech.
There was a positive message on inflation with the Office for Budget Responsibility (OBR) forecasting that inflation is set to fall to 2% in the next 2 months, which is in line with the Bank of England’s inflationary target and is down from a high of 11% when Hunt took over as Chancellor in October 2022. The OBR has also forecast 0.8% growth for this year, which is up from the November 2023 forecast of 0.7%.
The headline grabbers
2p in the pound cut in National Insurance for employees and the self-employed
Introduction of the 'Great British ISA'
Property Tax adjustments
Child Benefit to be paid to more families
Non-dom tax status abolished
What changes are most likely to impact you and your personal finances?
National Insurance
As rumoured, the Chancellor announced that he will be reducing the rate of national insurance from 10% to 8% for employed people and 8% to 6% for the self-employed, coming into effect from 6th April 2024. For an employed worker, this will result in savings of £349 a year for someone earning a salary of £30,000 and £749 a year for those earning £50,000.
Great British ISA
A new ISA type, focused on channelling more investment into UK assets, was announced during Jeremy Hunt’s budget speech. The GB ISA will provide investors with an annual allowance of £5,000, in addition to the current annual ISA allowance of £20,000, with the same tax advantages applying.
Capital Gains Tax on the sale of Property
The higher rate of Capital Gains Tax (CGT) on property sales will be reduced from 28% to 24%. However, it’s important to note that from 6th April 2024, an individual’s Capital Gains Tax allowance is reducing from £6,000 to £3,000, meaning more of the capital gain will be potentially taxable. The chancellor has also confirmed that the lower rate of capital gains tax at 18% will remain for any gains that fall within an individual’s basic rate band.
Furnished Holiday Let Scheme (FHL)
It has been announced the government will be abolishing the FHL tax regime from April 2025, which will remove the tax benefit to landlords who let out short-term furnished holiday properties, over those who let out residential properties to longer-term tenants.
Child Benefit High Income Charge
From this April, the earnings threshold for Child Benefit, which has been frozen since 2013, will rise to £60,000 from £50,000 for a single parent. In addition to this, currently those earning over £60,000 lose the benefit altogether, this is now being increased to £80,000.
The chancellor also announced plans to reform the child benefit system by April 2026, and plans on bringing in a household-based system and not that of individuals.
VAT Threshold
The VAT registration threshold is due to rise slightly, from £85,000 to £90,000, which will mean that fewer small businesses will pay tax.
Non-Domiciled tax status
A non-dom tax status is given to a UK resident whose permanent home, or domicile, is outside of the UK. Currently, a ‘non-dom’ only pays UK tax on the money they earn in the UK, they do not have to pay UK tax on income received elsewhere in the world.
From April 2025, new arrivals into the UK will not be required to pay any tax on foreign income and gains in the first four years of their UK residency. After that period, if an individual continues to live in the UK, they will pay the same tax as everyone else. The chancellor estimates removing this tax status will raise £2.7bn a year by 2028/29.
Individual guidance
While this article provides a general overview, the specific impact of these changes will vary depending on your individual circumstances. If you are already a client of Chesterton House all of these changes will be taken into account as part of your regular Progress Meeting process, and we will contact you if there are any actions to be taken before then.
There were of course, many other announcements made during the Budget and if you would like to read in more detail about the Chancellor's announcements, you can do so here.
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Disclaimer: This blog post is for informational purposes only and should not be considered tax or financial advice. Please consult with a qualified professional for personalised guidance.