2024 Spring Budget

The Chancellor gave an earlier than usual Spring Budget Statement that might imply a further budget before an Autumn General Election. The headline was, yet another,  cut in National Insurance but there were also some other changes announced, no doubt, to help make up for the reduction in NI Tax Receipts.

The Key points were as follows:

·        Further cuts to Class 1 Employee NI (PAYE) and Class 4 self-employed/partner NICs to take effect from 6th April 2024.

·        Income Tax liability can be paid in instalments from September 2025

·        UK ISA launched in addition to existing £20,000 limit.

·        “Non-Dom” status abolished from 6th April 2025 and replaced by a scheme that’s yet to be announced

·        The higher rate of Capital Gains Tax (CGT) for residential property disposals will be cut from 28% to 24% from 6th April 2024

·        Furnished Holiday Lets (FHL) rules to be abolished from 6th April 2025

·        Stamp Duty Land Tax (SDLT), multiple dwellings relief

·        VAT threshold increases to £90,000 from 1st April 2024 with the deregistration threshold increased to £88,000.

NI

The Upper Earnings Limit, Upper Secondary Thresholds and Upper Profits Limit will remain aligned to the unchanged Higher Rate Threshold at £50,270 for 2024/25 to 2027/28, as previously announced. The Class 1 Primary Threshold (PT) of £12.570 and Secondary Threshold of £9,100 will remain frozen until April 2028.

Similarly, the Upper Earnings Limit (UEL) and Class 4 Upper Profits Limit (UPL) will remain aligned to the Higher Rate Threshold of £50,270 to April 2028. The Lower Earnings Limit (£6,396) and the Small Profits Threshold (SPT-£6,725) will also be unchanged in 2024/25.

The Employee Class 1 Primary contribution rate of earnings between the Pt and UEL will be cut by 2% to 8% from 5th April 2024. The 2% rate will be unchanged on earnings above the UEL. The Self-employed Class 4 contribution rate on earnings between the Lower Profits Limit (LPL) and UPL will also be reduced by 2% to 6%. The 2% rate will not change on earnings above the UPL

Class 2 contributions will no longer be required from the Self-employed as announced in the Autumn Statement 2023. However, those with profits below the SPT, who wish to retain access to contributory benefits (eg State Pension) have the option to make voluntary contributions at a rate of £3.45 per week.  

The voluntary Class 3 rate will be unchanged at £17.45 per week for 2024/25.

Company Car Tax

The Company car Tax Rates for 2024/25 will remain unchanged from 2023/24. As announced in the Autumn Statement 2024/25 the rates for electric and ultra-low emission cars will increase by 1% in each of 2025/26, 2026/27 and 2027/28. These will be subject to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars.

The rates for all other bands of vehicles will be increased by 1% for 2025/26 up to a maximum appropriate percentage of 37%, they will then be fixed for 2026/27 and 2027/28.

ISA

A consultation paper has been published on the creation of a UK ISA, which could invest in UK shares or other UK-oriented investments, possibly including corporate bonds and gilts. The new UK ISA will have a subscription limit of £5,000 in addition to the existing £20,000 ISA allowance.

The ISA annual subscription limit for 2024/25 will remain at £20,000 and the corresponding limit for junior ISAs (JISAs) and child trust funds (CTFs) will stay at £9,000. Several technical changes to ISAs take effect from 6 April 2024, including a rise in the minimum opening age for cash ISAs to 18; the end of restrictions on subscriptions to multiple ISAs of the same type within the tax year (except for Lifetime ISAs); and the lifting of the ban on partial transfers of current year ISA subscriptions between ISA managers.

Non-Doms

The remittance basis of taxation for non-UK domiciled individuals will be replaced from 6 April 2025 with a residence-based regime. Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the previous ten years.

Transitional arrangements will be introduced for existing non-domiciled individuals claiming the remittance basis that will provide an option to rebase the value of capital assets to 5 April 2019. There will be a temporary 50% exemption for the taxation of foreign income for 2025/26. A two-year ‘temporary repatriation facility’ will be available for individuals to bring their previously accrued foreign income and gains into the UK at a 12% rate of tax.

Overseas workday relief (OWR) will also be reformed. Eligible employees will be able to claim OWR for their first three years of tax residence, benefitting from income tax relief on earnings for employment duties carried out overseas but with current restrictions on remitting these earnings removed.

The government will consult on plans to move to a residence-based regime for inheritance tax (IHT), including consulting on a ten-year exemption period for new arrivals and a ten-year ‘tail-provision’ for those who leave the UK and become non-resident. No changes to IHT will take effect before 6 April 2025.

CGT

The CGT annual exempt amount for individuals and personal representatives will be cut to £3,000 for 2024/25. The annual exempt amount for most trusts will likewise fall to £1,500 (minimum £300) as previously announced. The allowance will no longer be index-linked.

From 6 April 2024, the higher rate of CGT for residential property disposals will be cut from 28% to 24% while the lower rate (for any gains that fall within an individual’s basic rate band) will remain at 18%.

SDLT

Multiple dwellings relief, a bulk purchase relief in the SDLT regime for England and Northern Ireland, will be abolished from 1 June 2024. Property transactions with contracts that were exchanged on or before 6 March 2024 will continue to benefit from the relief regardless of when they complete, as will any other purchases that are completed before 1 June 2024.

The rules for claiming first-time buyers’ relief from SDLT in England and Northern Ireland will be amended from 6 March 2024. Individuals (including victims of domestic abuse) who buy a leasehold residential property through a nominee or bare trustee will be able to claim first-time buyers’ relief. Before this change, the individual was not treated as the purchaser and so was not entitled to the relief.

The ATED annual charge rises by 6.7% from 1 April 2024 in line with the CPI. For ATED filing and payment purposes in 2024/25, a property revaluation as at 1 April 2022 is required (or the date of acquisition for a property acquired after that date).

VAT

The VAT registration threshold will increase from £85,000 to £90,000 from 1 April 2024. The deregistration threshold will go up from £83,000 to £88,000.