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2024 Spring Budget

On the 6th of March 2024, the chancellor delivered his Spring budget.

Below are the key announcements made:

BUSINESSES

‘Full expensing’ deduction for leased assets

The chancellor announced an intention to include full expensing tax relief on leased assets. The relief will enable businesses to be more efficient by leasing assets to nurture productivity by getting the newest, cleanest and most efficient plant and machinery into the hands of business owners. No timeline for the start of the relief has been announced and the relief is subject to draft legislation to be published.

UK Independent Film Tax Credit

At Spring Budget 2024, the Chancellor announced the UK Independent Film Tax Credit (IFTC). Under IFTC, eligible films will be able to opt-in to claim enhanced Audio-Visual Expenditure Credit (AVEC), at a rate of 53%, on their qualifying expenditure. Qualifying productions must have started principal photography on or after 1 April 2024, and only expenditure incurred on or after 1 April 2024 can be claimed. Claims can be submitted to HMRC from 1 April 2025 onwards, in respect of expenditure incurred from 1 April 2024, provided a film began principal photography after 1 April 2024.

Theatre Tax Relief 

As announced at Spring Budget 2024, the government will introduce legislation in Spring Finance Bill 2024 for permanent 40%/45% (for non-touring/touring and orchestral productions respectively) headline rates of relief for Theatre Tax Relief, Orchestra Relief, and Museums and Galleries Exhibition Tax Relief. These rates will take effect from 1 April 2025.

Recovery loan scheme

The third iteration of the Recovery Loan Scheme – which is due to end in June 2024 – will be extended and renamed as the Growth Guarantee Scheme. The terms of the scheme will remain unchanged, ensuring continuity and consistency for lenders and the business community and will provide a 70% guarantee to participating lenders on finance of up to £2m offered to smaller businesses.

VAT Thresholds

From 1 April 2024 the taxable turnover threshold which determines whether a person must be registered for VAT will be increased from £85,000 to £90,000.

The taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £83,000 to £88,000.

Furnished Holiday Lettings (FHL) regime abolished.

The government will abolish the FHL tax regime, 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.

At the moment, landlords who use the furnished holiday lets regime can deduct the full cost of their mortgage interest payments from their rental income, are entitled to capital allowances on the furniture, pay lower capital gains tax (CGT) when they sell, are entitled to CGT rollover relief etc.

INDIVIDUALS

Income tax

As previously announced, Personal tax thresholds – i.e. personal allowance, basic and higher-rate thresholds for income tax remain frozen until April 2028 at the current level of £12,570 and £50,270. The additional rate threshold was reduced from £150,000 to £125,140 from 6 April 2023. 

Personal allowance for higher rates from 2023/24

Where annual income exceeds £100,000, personal allowance is lost at a rate of £1 for every £2 of income above £100,000. This is the threshold where the entire personal allowance is lost. 

The loss of the personal allowance means a person is taxed at 40% on the additional £2 of income, and they also pay an extra 40% on the £1 of personal allowance lost. This results in a marginal rate of 60%, which continues up to £125,140 (£100,000 + (£12,570 x 2)). At the £125,140 point the entire personal allowance is lost.

National insurance

The government will introduce legislation to reduce the main rate of primary Class 1 National Insurance contributions by 2 percentage points from 10% to 8% from 6 April 2024.

For the self-employed, the government will introduce legislation to reduce the main rate of Class 4 National Insurance contributions by 2 percentage points from 8% to 6% from 6 April 2024.

This is in addition to the previously announced reduction in the main rate of Class 4 National Insurance contributions from 9% to 8% and means that from 6 April 2024 the main rate will reduce from 9% to 6%.

Capital gains tax: reduced annual exemption. 

As previously announced, the annual exemption amount for capital gains tax for individuals will reduce from £6,000 to £3,000 from April 2024. 

The CGT rate for higher rate taxpayers on gains on disposals of residential properties will be reduced to 24% from April 2024.

Non-Dom status to be replaced by new residence based system

The government will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime, which will take effect from 6 April 2025. The government has also announced an intention to move to a residence-based regime for inheritance tax, with plans to publish a policy consultation on these changes, followed by draft legislation for a technical legislation, later in the year.

High Income Child Benefit Charge threshold 

The government will introduce legislation in the Spring Finance Bill 2024 to increase the High-Income Child Benefit Charge (HICBC) adjusted net income starting threshold to £60,000, from the 2024-25 tax year onwards. It will also amend section 681C to extend the HICBC taper to between £60,000 and £80,000. For those with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal 1% for every £200 of income that exceeds £60,000. The charge on taxpayers with income above £80,000 will be equal to the full amount of child benefit paid.

New British ISA investment allowance

The government has announced the introduction of the UK ISA. This will have a new ISA allowance of £5,000 in addition to the existing annual ISA allowance of £20,000 and will provide a new tax-free savings opportunity for people to invest in the UK. This will be introduced after a consultation which will run from 6 March 2024 to 6 June 2024.

OTHER

Stamp Duty Land Tax (SDLT) relief for multiple dwellings to be abolished.

Purchasers of residential property in England and Northern Ireland who acquire more than one dwelling in a single transaction or linked transactions will not be able to obtain Multiple Dwellings Relief (MDR) from 1 June 2024. MDR is a bulk purchase relief in Stamp Duty Land Tax (SDLT). The rate of tax is normally determined by the total consideration given for land. MDR is available to any purchaser buying 2 or more dwellings in a single transaction, or linked transactions, and allows the purchaser to calculate the tax based on the average value of the dwellings purchased as opposed to their aggregate value.

KEY TAX RATES

                  
 Income tax rates: England, Wales & Northern Ireland 
(non-dividend income)
2024/252023/24
0% starting rate for savings onlyUp to £5,000Up to £5,000
0% on personal allowance (subject to any clawback of PA)£0 – £12,570£0 – £12,570
20% basic rate tax£12,571 – £50,270£12,571 – £50,270
40% higher rate tax£50,271 – £125.140£50,271 – £125.140
45% additional rate taxAbove £125,140Above £125,140
Scottish rates of income tax (non-dividend income)                                     
0% on personal allowance (subject to any clawback of PA)£0 – £12,570£0 – £12,570
19% starting rate £12,571 – £14,876£12,571 – £14,732
20% basic rate tax£14,877 – £26,561£14,733 – £25,688
21% intermediate rate tax£26,562 – £43,662£25,689 – £43,662
42% higher rate tax £43,663 – £75,000£43,663 – £125,140
45% advanced rate£75,001 – £125,140n/a
48% top rate (47% for 2023-24)Above £125,140Above £125,140
National insurance2024/252023/24
Lower earnings limit, primary class 1 (per week)£123£123
Upper earnings limit (UEL), primary class 1 (per week)£967£967
Primary threshold (PT) (per week)£242 £242 
Secondary threshold (per week)£175£175
Employment allowance (per year/employer)£5,000£5,000
Employee’s primary class 1 rate between PT and UELFrom 6 April 2023 to 5 January 2024From 6 January 2024 to 5 April 20248% 12%10%
Employee’s primary class 1 rate above upper earnings limit 2% 2% 
Married woman’s reduced rate between PT and UELFrom 6 April 2023 to 5 January 2024From 6 January 2024 to 5 April 20241.85% 5.85%3.85%
Married woman’s rate above upper earnings limit2%2%
Employer’s secondary class 1 rate above secondary threshold 13.8%13.8%
Class 2 small profits threshold (per year) £6,725£6,725
Class 2 lower profits threshold (per year) n/a12,570
Class 2 small profit threshold (voluntary- per week)£3.45£3.45
Class 2 rate (per week where profits are above lower profits limit threshold£0£3.45 
Class 3 voluntary rate (per week)£17.45£17.45
Class 4 lower profits limit £12,570£12,570
Class 4 upper profits limit£50,270£50,270
Class 4 rate between lower profits limit and upper profits limit 6%9%
Class 4 rate above upper profits limit 2%2%
Class 1A/1B NIC 13.8%13.8%

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Autumn Statement 2023

The tax measures announced in the autumn statement had been previously announced except for the reduction of the main rate of National insurance.

We have summarised below key announcements made.

Business

  • Expensing allowance made permanent. This was initially set to expire by April 2026.

It relates to qualifying expenditure of plant and machinery (business assets). 100% first year allowances for main rate expenditure and 50% allowances for special rate expenditure.

The relief is available to incorporated businesses on the purchase of qualifying plant and machinery (business assets).

  • Enhanced support for Research and Development intensive small and medium sized businesses.
  • The special tax site reliefs for Freeports and investment zones will be available for a further five years until 30 September 2031.  

Personal

  • A 2% reduction of the main rate of National insurance effective 06.01.2024.

Reduced from 12% to 10% on income between 12,570 and £50,268.

Reduction of class 4 national insurance for self-employed individuals from 9% to 8%.

Abolition of class 2 national insurance for the self-employed individuals.

  • Removal of the self-assessment filing threshold of £150,000 for individuals who earn all their income via pay as you earn.
  • Cash based accounting for self-employed individuals and individuals in a partnership as default with an option for businesses to opt out.
  • ISA system to be simplified. By widening the scope of investments, allowing multiple subscriptions to ISAs in the same tax year and making ISA reporting systems digital effective 06 April 2024
  • Venture capital schemes: the enterprise investment scheme and venture capital trusts will be extended by another ten years, to April 2035.

Other

• National Minimum Wage: the full National Living Wage rate will increase to £11.44/hour (up from £10.42) from April 2024 and will be extended to those aged 21 and over. The 18–20 rate will increase to £8.60/hour, and the apprentice rate to £6.40/hour. 

• Pensions: the full new state pension will increase by 8.5% in April 2024 (maintaining the triple lock guarantee). Digitalisation of relief at source will be delayed ‘until April 2027 at the earliest’. 

• Benefits (including Universal Credit): will increase by 6.7% from April 2024 (based on Sept 2023 inflation).

Administration

  • Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA) design changes

Planned improvements to the design of the system.

Draft regulations will be published for technical consultation later in 2023.

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