UK Budget 2024: Key Changes Effective from April 2024
The UK government's Spring Budget 2024, delivered in March 2024, outlined several key changes taking effect from April 2024. These changes aim to support individuals and businesses amidst ongoing economic challenges. Here's a summary of the main points:
What did we not see?
Many had hoped for a cut in Corporation Tax for smaller businesses which did not materialise.
No further changes to the Research and Development tax credit schemes were announced. The government intends to form an expert panel to support the ongoing administration of the scheme.
The Enterprise Investment Scheme and Seed Enterprise Investment Scheme were not subject to any changes.
National Insurance Contributions
There will be a 2p reduction in NIC which means that the main rate will be 8% from 6 April 2024. No changes were announced to the employer rate of 13.8%.
Class 4 National Insurance Contributions, payable by the self employed, will reduce from 9% to 6% on 6 April 2024. This is an increase on the previously announced reduction which was due to reduce the rate to 8%.
The child benefit threshold will be raised from £50,000 to £60,000 from 6 April 2024. The taper will be increased such that there is no entitlement to child benefit for those with income over £80,000 (currently £60,000). Plans are afoot to move to a household income based system from April 2026, but more time is needed before plans are announced.
Capital Gains Tax on Residential Property
The higher rate of CGT on residential property will be reduced from 28% to 24% for transactions where exchange takes place on or after 6 April 2024. The 60 day reporting requirement begins from completion so returns submitted after that date may still need to apply the 28% rate where the exchange took place prior to 6 April.
Furnished Holiday Let Regime Abolished
The FHL regime will be abolished from 6 April 2025. This regime allowed FHLs to be treated as a trade and as such its abolition will have the following consequences:
The Ability to Claim Capital Allowances will be Removed
The entitlement to Business Asset Disposal Relief on sale of a business will no longer apply as the property will be classed as an investment. This means that rather than being eligible for CGT at 10% on the first £1m of gains in a lifetime, the applicable rate will be 18% for profits within the basic rate band and 24% thereafter.
A full deduction for interest payable on mortgage lending will no longer be available to higher rate taxpayers
Profits from FHLs are currently treated as earnings for pension purposes: advice should be sought from a pensions adviser on the impact of the announcement on your pension.
Non Domicile Regime Abolished
The tax regime for non-domiciled individuals will be abolished from 6 April 2025. The regime, which allowed those whose permanent home is not in the UK to exempt their foreign income and gains from UK tax unless brought to the UK, will be replaced. Those arriving in the UK will not be subject to UK tax on their foreign income and gains during their first four years in the UK. After that period, they will be subject to UK tax on their worldwide income and gains in the same way as UK tax residents.
Savings
The government is consulting on a UK ISA with a £5,000 allowance and will launch a government backed British Savings Bond from April 2024.
Multiple Dwellings Relief
MDR, a Stamp Duty Land Tax relief for purchasers of multiple properties, will be abolished from June 2024. Transactions which exchanged before 6 March 2024 will be eligible, regardless of when they complete.
Full Expensing
Full expensing, a 100% first year tax deduction for main rate pool assets and a 50% deduction for special rate assets, was made permanent last year. The government has now announced that draft legislation will be published to extend this to leased assets where the lessee is treated as the owner of the asset.
Creative Sector Tax Reliefs
A new Independent Film Tax Credit will be introduced for films commencing principal photography from April 2024. The rate will be 53%, applicable to films receiving the British Film Institute accreditation and with budgets below £15m. There will be a cap of 80% on core expenditure.
The previously announced reductions to the rates of Museums and Galleries, Orchestra and Theatre tax relief have been reversed.
VAT
The registration threshold has been increased from £85,000 to £90,000 and the deregistration threshold from £83,000 to £88,000, both effective from 1 April 2024.
Additional Points:
Fuel duty: The government has continued the freeze on fuel duty for another year.
Income tax bands: As previously announced, income tax bands remain frozen in 2024, potentially impacting some individuals who move into higher tax brackets due to inflation.
It's important to note that this is a summary of the key changes, and the full details and potential implications can be found on the UK government website https://assets.publishing.service.gov.uk/media/623b09a8d3bf7f6ab5710778/SS_Tax_Plan.pdf. Individuals and businesses are advised to seek professional advice for a more personalised understanding of how these changes might affect them.
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