Spring Budget 2024 - Key Business Points

Jeremy Hunt, the Chancellor of the Exchequer, has delivered a Spring budget that holds few surprises as the headline change in National Insurance has been covered in the press days in advance.  Given that this was his last budget before the general election, many had hoped for the Chancellor to be more generous with tax cuts, specifically increasing tax thresholds which were frozen by Rishi Sunak in April 2021.

However, the Chancellor decided to take the cheaper route of reducing National Insurance (costing £10bn) instead of cutting income tax (costed at around £14bn).   

The Budget headline was the 2% cut in the main rate of national insurance contributions (NIC) for employees and the self-employed from 6 April 2024.  Considering the changes announced last autumn, this equates to a total cut in the main NIC rate for employees of 4% and a cut in the self-employed rate of 3%.

New NIC Rates

The rates from 6th April 2024 are now:

• National insurance paid by employees (Class 1): 8% 
• National insurance paid by self-employed (Class 4): 6%

This gives little time for businesses to update their systems with the new rate, but Naylor Accountancy Services can help.

Most businesses will see little change with UK corporation tax staying at 25% and full expensing for plant and machinery expenditure remaining in place.  The Chancellor confirmed that he planned to extend full expensing to leased plant and machinery when economic conditions allow. 

The VAT registration threshold will increase from £85,000 to £90,000.  The deregistration threshold will increase from £83,000 to £88,000. These changes are effective from 1 April 2024.  This is good news for many contractors and micro businesses who will no longer have to charge VAT or manage the administration burden it imposes.  

Something to make Creatives smile

Additional incentives, worth about £1 billion over the next five years, for the creative sector were announced including:

• A 53% UK independent film tax credit will be introduced for films with budgets under £15 million from 1 April 2024.
• A 5% increase in tax relief for UK visual effects in film and high-end TV.  UK visual effects costs will be exempt from the 80% cap on qualifying expenditure from 1 April 2025.  There will be a consultation, but it is not expected to be possible to claim both this relief and the new independent film tax credit for the same film.
• The Theatre Tax Relief, Orchestra Relief, and Museums and Galleries Exhibition Tax Relief (MGETR) will be made permanent from 1 April 2025 at 45% for touring and 40% for non-touring productions 
• Eligible film studios will benefit from a 40% relief on gross business rates until April 2034

This is excellent news for the creative industries that Naylor Accountancy Services is delighted to support.  

We specialise in accountancy help for creatives.

Good news for residential landlords- the rate of Capital Gains tax on the sale of residential property has been reduced from 28% to 24%. 

However, the Stamp Duty Land Tax relief available for those who purchase more than one property in a single transaction will be abolished. This applies for transactions with an effective date of 1 June 2024 onwards, with transitional rules if the exchange took place on or before 6 March.     

Also from April 2025, the Furnished Holiday Let regime will be abolished. This removes the tax advantages available for Furnished Holiday Lets compared to longer-term lets. 

Hospitality and those who enjoy a drink will be pleased to hear that the current freeze on alcohol duty has been extended to February 2025.    

Haulage firms, delivery companies and drivers are delighted that the 5p cut to fuel duty announced in March 2022 remains in place.  

There is an ongoing impact on energy sector businesses. The Energy Profits Levy (the 35% charge on profits arising from the upstream production of oil and gas) is to be extended for an additional year to 31 March 2029.

Individual Taxation

There was some good news for working parents. On 6th April 2024, the threshold for applying the high-income child benefit charge will be increased from £50,000 to £60,000.  This means parents will now enjoy the full benefit until the highest earner earns £60,000 or more.  

The taper range has also been increased, meaning parents are eligible for some child-care benefits until the highest earner takes home £80,000 or more.  A fairer household-based system will be introduced from April 2026, rather than simply looking at the highest earner.

Savers will be able to benefit from the British ISA, which gives them an additional £5,000 tax-free allowance to invest in UK assets.  This is on top of the existing £20,000 limit.  The Government has promised to consult on this new ISA.

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Dom or Non-Dom?

The largest tax-raising measure is the abolition of the existing non-domicile regime from 6 April 2025.  This will be replaced with a new exemption for foreign income and gains for the first four years of UK residence of an individual coming to the UK on the proviso that they have not been resident in the UK for the last ten years.  There is also a transitional regime.  

Existing non-UK domiciliaries will need to take care to understand the new rules and the potential benefits provided by the transitional regime over the next year. 

Finally, there is a proposed change to the inheritance tax system from one based on domicile to one based on residence in conjunction with connection factors. This is subject to consultation and will not take effect until 6 April 2025 

As always, there is a lot to take in and it can be confusing.  Naylor Accountancy Services makes tax simple. If you would like support with your accounts, taxes, NI, and VAT, please contact us today for a no-obligation discussion.