Spring Budget 2024

As was previously announced, the Personal Tax Allowance currently set at £12,570, will remain at this level until 2028. The Basic Rate Tax Band, presently set at £37,700 will also stay the same until April 2028. Personal allowances will be reduced by £1 for every £2 a person’s income exceeds £100,000. 

 

As announced in the Autumn Statement 2023, from 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits, including the State Pension. The employees NIC rate will be reduced from 10% down to 8% from April 2024. The self-employed Class 4 NIC rate will fall from 8% to 6% from April 2024. 

 

As already announced, the 0% rate tax dividend threshold will fall from £1,000 to £500 from 6th April 2024. There will be no change to the dividend tax rate. 

 

The FHL tax regime will be abolished, eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let out residential properties to longer-term tenants. This will take effect from April 2025.  

 

Draft legislation will be published in due course and will include an anti-forestalling rule. This will prevent the obtaining of a tax advantage through the use of unconditional contracts to obtain capital gains relief under the current FHL rules. This rule will apply from 6 March 2024. 

 

Currently gains made on disposals of residential property that do not qualify for main residence relief (MRR) are chargeable to CGT at 18% for any gains that fall within an individual’s unused basic rate band and 28% where the chargeable gains exceed the unused part of their basic rate band. 

 

From 6th April 2024, the higher capital gains tax rate on the sale of residential property will be reduced to 24% from 28%. This change may impact upon individuals, trustees and personal representatives who are liable to pay Capital Gains Tax (CGT) on residential property gains. 

 

The lower rate for basic rate taxpayers will remain at 18%.  

 

The individual’s High Income Child Benefit Charge (HICBC) adjusted net income threshold will increase from £50,000 to £60,000, from 6 April 2024.  

 

For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one per cent for every £200 of income that is more than £60,000.  

 

A consultation will take place to introduce legislation from April 2026 to base the HICBC on household income as opposed to an individual’s income in order to make the system fairer. 

 

From 6 April 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals. This will be replaced with a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non-UK residence.  

 

Qualifying individuals will not pay tax on FIG arising in the first 4 tax years after becoming UK tax resident and will be able to bring these funds to the UK free from any additional charges. They will not pay tax on non-resident trust distributions either.  

 

Individuals, who on 6 April 2025, have been tax resident in the UK for less than 4 years (after 10 years of non-UK tax residence) will be able to use this new regime for any tax year of UK residence in the remainder of those 4 years. Claims to use the new 4-year FIG regime are to be made for each year to which it is to apply. 

 

The annual pension allowance will remain at £60,000 for 2024/25. The money purchase annual allowance will remain at £10,000.  

The minimum Tapered Annual Allowance will remain at £10,000 for individuals who’s adjusted income for the year is £260,000 or more.  

 

From 6th April 2024, in the event of a pension member dying under the age of 75, any lump sum tax free limit not utilised by the deceased will remain tax free in the hands of qualifying beneficiaries. Any excess above that limit will be taxed at the beneficiaries marginal rate of tax. 

 

The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275. However those individuals who have protected rights already in place can take a higher tax free amount.  

 

The government will introduce a new UK ISA with its own allowance of £5,000 a year. This will be on top of the existing ISA allowance of £20,000. 

 

The taxable turnover threshold for determining whether a business must register for VAT will increase from £85,000 to £90,000 from 1st April 2024 and the point at which a business can apply to deregister will rise from £83,000 to £88,000. 

 

If you are unsure as to whether you are affected by any of the changes that the Spring Budget has brought in, or would like further information please do let our team know. We will be happy to share further information with you as requested. You can call us on 01937 584188 or send us a call back request.