Spring Budget 2024 - Overview of the changes

In what is widely expected to be the last Budget statement before the general election here are the key highlights impacting private individuals:

Tax for Workers

  • Employee’s National Insurance – as was widely publicised before the statement, there will be a further reduction in the primary rate of national insurance for employees from 10% (the reduced rate announced in the Autumn statement and which was only introduced from 6 January 2024) to 8%, to be brought in on 6th April 2024. For someone earning the national average salary of £35,000 per annum, this will represent an annual saving of £450. National Insurance is not devolved so Scottish employees will benefit from this change (as is the case for the reduction to the self-employed contributions mentioned below).
  • Class 2 National Insurance – as previously announced, this charge for self-employed individuals will be abolished from 6th April 2024.
  • Class 4 National Insurance – self-employed taxpayers will see a reduction from 8% to 6% in the main Class 4 rate from 6 April 2024 (again the 8% rate only having been announced in the Autumn statement). This further reduction will represent a saving of £650 per annum on average.

Property Taxation

  • In a somewhat surprising move, the top rate of capital gains tax applicable to disposals of residential property will be reduced from 28% to 24%, with effect from 6 April 2024. The lower rate of CGT for residential property disposals will remain at 18%.
  • The current favourable Furnished Holiday Lettings tax regime is perceived to be causing a distortion in the market and this will be abolished from April 2025. This will remove some useful tax benefits around the use of losses and the application of business asset disposal relief. Draft legislation is expected to develop this further including clarity on a proposed anti-forestalling rule.
  • Stamp Duty Land Tax multiple dwellings relief will be abolished from 1 June 2024, albeit there are some protective measures for transactions exchanged on or before 6 March 2024 which complete after 1 June 2024, and for transactions substantially performed before 1 June 2024. This will not automatically apply to Scottish transactions under the LBTT version of multiple dwellings relief.

Non Domiciled Individuals

  • The current tax regime for UK residents but non-UK domiciled individuals will be abolished from 6 April 2025.
  • This will be replaced by a simpler residence-based regime – individuals arriving into the UK who opt into the regime and have been non-UK residents for at least 10 consecutive years, will not pay UK tax on foreign income and gains for the first four years of tax residence.
  • The measures will include transitional measures for existing UK residents, and non-doms, who will be given a period of two years where they will be encouraged to bring funds to the UK to spend and invest in the UK.
  • Overseas workday relief will continue to provide income tax relief for earnings from duties carried out overseas for the first three years, with the restrictions on remitting those funds being removed.
  • The government intends to consult on changes to a residence-based regime for inheritance tax – the consultation and draft legislation are expected later this year.

Other Matters

  • Child Benefit – the current anomaly between married and unmarried couples will end with the introduction of a household system in 2026. In the meantime, the threshold where a reduction in child benefit is required is to increase to £60,000. In addition, the threshold above which there will be a full restriction is to increase to £80,000. Between £60,000 and £80,000 the tax charge is assessed at 1% for every £200 of income over £60,000, which is a halving of the previous restrictions.
  • As previously announced, the dividend allowance, currently £1,000, will be reduced to £500 from 6 April 2024.
  • The capital gains tax annual exempt amount will reduce to £3,000 from 6 April 2024, as announced previously.
  • Capital Allowances – the Chancellor had previously announced the “full expensing” policy to be made permanent where companies could claim 100% capital allowances on “main rate” expenditure and 50% on any “special rate” expenditure. In addition, he has announced plans to extend the “full expensing” regime to leased assets – this will be introduced when affordable.
  • The VAT registration threshold will be increased from the current £85,000 to £90,000, with effect from 1 April 2024
  • A new “UK ISA” will be consulted on – this is intended to provide an additional £5,000 per annum allowance to be invested in UK businesses, in addition to the current ISA allowances.