On Wednesday 6th March 2024, Chancellor Jeremy Hunt delivered his Spring Budget for 2024. Our tax experts outline some of the key updates to the government’s tax and spending plans.
The Chancellor of the Exchequer Jeremy Hunt revealed his Spring Budget in the House of Commons on Wednesday 6th March, detailing the government’s plan of action for the UK economy amidst rumours of a possible general election in May.
What has been announced in the Spring Budget 2024?
The Spring Budget saw a series of tax changes and new measures announced. Below we have summarised the key takeaways from the announcement.
The UK economy and public finances
- The Office for Budget Responsibility forecasts a UK GDP growth of 0.8% in 2024 (compared to the previous prediction of 0.7%) and 1.9% in 2025 (up from the earlier estimate of 1.4%). The numbers in brackets represent the OBR’s November predictions.
- The Office for Budget Responsibility anticipates that inflation will fall below the target in just a matter of “months.”
- The Office for Budget Responsibility expects Treasury borrowing to be 91.7% of GDP in 2024/25 (up from 91.6%) and 92.8% in 2025/26 (up from 92.7%). These figures are based on their predictions last November.
Tax changes
- From April 2024, the main rate of employees’ National Insurance contributions is dropping from 10% to 8%, benefiting around 27 million workers with potential savings of up to £450 per year.
- The main rate of Class 4 National Insurance contributions for the self-employed will drop from 9% to 6% from April 2024, a further reduction after it was previously announced in the Autumn Statement to be reducing from 9% to 8% alongside the abolition of Class 2 NICs.
- The higher residential property Capital Gains Tax rate is set to decrease from 28% to 24%.
- The stamp duty relief for buying multiple homes at once, known as Multiple Dwellings Relief, has been scrapped. This will take effect from 1st June 2024.
- The furnished holiday lettings regime will be abolished from April 2025.
- The non-dom tax status will be removed in April 2025. This change means that foreign nationals residing in the UK but officially domiciled overseas will no longer be able to avoid paying UK tax on their foreign income or capital gains. A more ‘straightforward’ residency-based system is set to be implemented in 2025.
- Businesses can expect full expensing to be extended to include leased assets in the future, with the Chancellor announcing he will publish draft legislation to cover this extension.
- The VAT threshold for small businesses has been increased from £85,000 to £90,000 (as of 1st April 2024). This will mean approximately 28,000 small businesses will drop below the threshold for paying VAT.
- Fuel Duty has been frozen for an additional 12 months and the 5p cut to petrol taxes that was introduced in 2022 remains in place.
- Film studios in England meeting eligibility criteria will receive a 40% relief on their gross business rates until 2034. Tax reliefs for touring and orchestral productions are now ‘permanent’ at 45%, and at 40% for non-touring productions.
Benefits
- A new British ISA is being introduced which will allow a £5,000 annual investment into UK businesses. It includes all the tax advantages of other ISAs and will be on top of any other existing allowances.
- Repayment periods for those on low incomes who take out new budgeting advance loans will increase from 12 to 24 months.
- The high-income Child Benefit Charge is changing to a household-based system from April 2026. In the meantime, from April 2024, the tapering threshold will increase to £60,000, and the full withdrawal limit is being raised to £80,000.
For more details on the significant updates unveiled in the Spring Budget 2024 or if you require personalised guidance on how these new policies may affect your business, contact one of our expert tax team today.
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