There was much speculation about what to expect in the Budget. The more significant tax savings were targeted towards individual taxpayers, most notably working families. But how will it impact you and your business? Please read on for our summary of the key points. We believe in seizing any opportunities presented by the announcements, and are here to work alongside you to help you grow. Please don’t hesitate to chat with us in further depth about any of the points raised. |
Reduction in employees’ National Insurance Contributions (NICs) The standard rate of employee’s NICs will decrease by afurther 2% in addition to the 2% reduction announced in the Autum Statement. This takes the rate down to 8% from April 2024. Employers’ NICs have not been reduced. Combined with the increase in the minimum wage from April 2024, employers will be facing higher payroll costs. |
High Income Child Benefit Charge (HICBC) The HICBC has always been perceived as unfair being based on an individual’s income, rather than that of the household. The government is working on plans to move to a household income basis by April 2026. In the meantime, the income threshold has been increased from £50,000 to £60,000 and the Child Benefit becomes repayable in full when the higher earner earns £80,000+ per annum. |
UK ISA and British Savings Bonds The launch of a new UK ISA and British Savings Bonds were announced. The UK ISA will be a £5,000 allowance in addition to the existing £20,000 yearly ISA allowance. Money paid into this will be put in UK investments. The British Savings Bonds will be delivered through NS&I and will be launched in April 2024. This will offer a guaranteed interest rate, fixed for three years, increasing the savings opportunities available to consumers. |
Non-domiciled individuals The current tax regime for UK residents who are not domiciled here will be abolished and replaced with a residence-based regime. It will be replaced with a simpler residence-based regime, which will take effect from 6 April 2025. Anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, regardless of their domicile status. |
Furnished holiday lettings Being in the location we are, this will affect many of our clients. The furnished holiday lettings regime is to be abolished from April 2025, thus eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those with long term lets. The detailed draft legislation is yet to be published but this potentially has a significant tax impact with the withdrawal of Capital Allowances on most capital expenditure, mortgage interest tax relief restricted to 20%, Capital Gains Tax not being subject to BADR (Business Asset Disposal Relief) and the withdrawal of Business Rates eligibility. There is no mention of a consultation so it looks like it will go straight to the draft legislation before Parliament. |
Changes to capital gains tax on residential property disposals The higher rate of Capital Gains Tax charged on residential property gains will reduce from 28% to 24% for disposals made on or after 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band. This mainly affects second (or more) homes and buy to let residential property. Your main residence continues to be eligible for Private Residence Relief. |
Self-employed National Insurance In the Autumn Statement it was announced that Class 4 National Insurance was being reduced by 1% to 8% and Class 2 contributions were being abolished from April 2024. A further 2% cut in National Insurance for the self-employed from April 2024 will bring the rate down to 6%. |
VAT turnover threshold increased to £90,000 The turnover threshold for VAT registration has been frozen at £85,000 since 2017 but is to rise to £90,000 from April 2024, with the deregistration threshold increasing to £88,000. Although this is good news, it does not address one of the key problems with VAT. It discourages some businesses from growing due to the ‘cliff edge’ effect of paying VAT over where customers are not willing to pay the additional cost. |
Recovery Loan Scheme / Growth Guarantee Scheme The Recovery Loan Scheme will be extended until the end of March 2026 and renamed the "Growth Guarantee Scheme". The scheme is a government-backed loan scheme that aims to support small and medium-sized businesses to “access the finance they need to grow and invest”. |
HMRC Digital Services HMRC’s digital services to support Income Tax Self Assessment taxpayers seeking to pay tax in instalments will be “improved and simplified” - with changes being implemented from September 2025. |
Duties Fuel duty Will remain at the current levels for a further 12 months Alcohol duty Rates will be frozen at current levels until 1 February 2025. Vaping Products Duty A vaping product duty will take effect from October 2026. A one-off tobacco duty increase of £2.00 per 100 cigarettes/50 grams of tobacco will also be introduced from 1 October 2026. Air passenger duty Non-economy class rates will be increased from 2025-26 |
Farming There was little in the Budget to help farmers. Many farmers are over state pension age and no longer pay National Insurance, so will not benefit from the reduced self employed rates. In the document behind the Chancellor’s speech farmers did get a mention: “In 2024, the farming sector will benefit from the largest-ever round of grants on offer to support investment in agricultural productivity and innovation, with £427 million of government funding crowding in additional private sector investment”. It goes on to point you to the Commitment to British Farmers. |
Other announcements
|
- Shepherd Partnership