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Spring Budget 2024 – key points
Following the recent spring budget, we have prepared a summary of the updates and changes which may affect you and/or your business. Please note, some of the information below may not apply to you.
Whilst the government confirmed there will be no changes to income tax rates and thresholds, below is a summary of what will change either from 6th April 2024 or 6th April 2025:
Summary
- High Income Child Benefit Charge – individual earnings threshold increased to £60,000
- Another 2% reduction in individuals National Insurance Contributions
- Furnished Holiday Lets tax treatment to change from 6 April 2025
- CGT higher rate on residential property reduced from 28% to 24%
- Non-Domicile tax breaks to be abolished
- VAT registration threshold to increase form £85,000 to £90,000
High Income Child Benefit Charge (HICBC)
The earnings threshold will increase from £50,000 to £60,000 from 6th April 2024. For earnings between £60,000 and £80,000 the HICBC will be calculated as 1% for every £200 of earnings over the £60,000 threshold.
If your earnings are between £50,000 and £80,000, and you have stopped receiving Child Benefit in the past due to high earnings, it may be worth contacting HMRC to restart your Child Benefit payments for 2024/25. Please contact us if you wish to discuss.
Reduction in National Insurance
The Government have confirmed that National Insurance will reduce by a further 2%, for both class 1 (employed) and class 4 (self-employed). This means that from 6th April 2024 the following rates will apply:
- Employees – 8% on earnings between £12,570 and £50,270, then 2% on higher earnings
- Self-employed – 6% on profits between £12,570 and £50,270, then 2% on higher earnings
- Employers NI – this is to remain at 13.8% on earnings over £9,100
In addition to the above, class 2 NI is being abolished from April 2024.
Furnished Holiday Lets (FHL) tax treatment to change from 6 April 2025
All FHL’s will be treated as any other residential property lets from 6th April 2025. The main consequences include the following:
- Finance interest relief will be lost
- Capital allowances will not be available on furniture, white goods etc.
- CGT business relief – HMRC currently treat a FHL as a business asset which means that when it is sold, the tax payer can claim ‘Business Asset Disposal Relief’ and pay CGT at the lower rate of 10%. From April 2025, the CGT rates will be the same as those for residential properties (18%/24%)
Capital Gains Tax
As previously announced, the annual allowance will reduce to just £3,000 from 6th April 2024.
The CGT tax rates will stay the same for basic rate tax payers (10% or 18% on residential property), however the higher rate of CGT on residential property will reduce from 28% to 24% from 6th April 2024.
The above changes may encourage people to sell their second homes, before 06/04/2025 where the tax rules change as explained in the FHL section above.
Non-Domicile tax breaks to be abolished
From 2025, Non-Domicile tax status will be lost if the individual has been a UK resident for 4 years. From the 5th year (of being UK resident) all foreign income and gains will also be taxable in the UK.
Please contact us if you believe the above will be relevant to you and you wish to discuss in more detail.
VAT registration threshold to increase
From April 2024 the VAT registration threshold is to increase from £85,000 to £90,000.
The VAT de-registration threshold has also been increased from £83,000 to £88,000.