Chancellor of the Exchequer Jeremy Hunt delivered his Spring 2024 Budget to a raucous House of Commons today. It was filled with proposals which, he explained, were designed to build on his government’s efforts to promote sustainable growth in the UK economy; but was this a budget designed for long term growth or a budget created with a general election in mind?
There were certainly a wide range of measures, including tax changes, some of which were forecast but the sheer number surprised many political and economic commentators. With a general election looming, possibly as early as May this year, the Chancellor provided a host of headline-grabbing changes including:
- A further 2% reduction in the rate of employees’ National Insurance Contributions and a comparable reduction for sole traders and the self-employed. Although to be welcomed by many, this will probably receive a mixed reaction.
- An increase in the VAT registration threshold from £85k to £90k – the first uplift in many years and may lighten the load for small businesses.
- The introduction, after consultation, of a new UK ISA geared towards UK equity investments and with an enhanced annual limit up from £20k to £25k – a measure to attract investment in British business.
- A new tax on vaping products from October 2026 and a one-off increase in tobacco duty – an attempt to create the first smoke-free generation.
- An anticipated one-off adjustment in Air Passenger Duty on non-economy flights.
- The abolition of the Furnished Holiday Lettings tax regime which provided more generous treatment of short-term holiday lets. From April 2025 this will bring them into line with the tax rules which apply to long term property rentals. This may encourage the release of more homes in areas where locals are unable to find affordable property to rent.
- A reduction in the Capital Gains Tax rate chargeable on residential property disposals from 28% to 24% - again perhaps an encouragement to make more homes available.
- The abolition of the ‘Non-dom’ tax status, an outdated approach to the taxation of someone resident in the UK but who does not pay UK tax on their overseas income. There will be transitional measures for existing non-doms and a new residence-based regime from April 2025. Associated Inheritance Tax issues are also to be dealt with under these changes.
- Changes to the income threshold at which Child Benefit is clawed back, increasing from £50k to £60k and an extension of the taper from £60k to £80k. This will come into effect from April 2024 but will be a temporary measure until the whole of the High Income Child Benefit Charge (HICBC) can be revamped to look at family/household income rather than that of an individual parent. This seems to be a step towards fairness and rather overdue.
We heard from the Chancellor that, as expected, the freeze on fuel duty rises would continue for a further 12 months and the alcohol duty freeze would also remain until 2025. Mr Hunt also outlined the continuation and expansion of various tax credits and reliefs for the UK creative industries and measures to support the important Life Sciences and Green sectors. He announced additional funding for devolution plans for the north-east of England and as part of the levelling up strategy, support for community cultural projects around the country. A different approach to Government departments’ spending was explained by the Chancellor. Additional funds would be made available to key Departments covering the NHS, Police, the Courts, and Local Government, where investment in technology, digitalisation and AI would produce tangible savings and help to improve efficiency.
As ever, mention was made of further funding for HMRC and its efforts to tackle tax avoidance and strengthen the framework in the tax advice market. Of particular interest to the contracting industry was the announcement that the Government would be giving an update on the recent consultation ‘Tackling non-compliance in the Umbrella Market’. This is expected on 18 April. Guidance for umbrella workers is also expected to be published by the Government in the summer. There is much in this Budget to mull over and some significant changes for several groups of taxpayers. Here at PayStream we’ll be examining the fine detail behind all the tax announcements to ensure that we can provide you with the best possible advice and guidance.
