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Maslins – Spring 2024 Budget Summary

Early March can only mean one thing… it’s Budget time!

There was plenty of speculation in the run-up to these announcements, marking the last Spring Budget before the next general election takes place, and with many calling on the Chancellor to ease what is currently the highest UK tax burden in over 70 years.

But what measures did Jeremy Hunt have to unveil?

Here, we’ll focus on the key topics for contractors and freelancers. For a more general breakdown of the other points, please see the summary from the BBC.

National Insurance

Although the Prime Minister’s preferred option was to cut income tax (after pledging in the previous Budget that he was going to cut the basic rate from 20% to 19% by 2024), the government instead opted to repeat the same 2% NI cut that was announced in the Autumn Statement.

  • For employees, the main rate of NI (payable on earnings between £1,048 and £4,189 per month) is due to fall from 10% to 8% from 06 April 2024.
  • For the self-employed, the rate of ‘Class 4’ NI (payable on annual profits between £12,570 and £50,270) will fall from 8% to 6% with effect from 06 April 2024.

As with the cut announced in the Autumn Statement, if you’re an existing Maslins client with your own limited company, then the above will almost definitely be of zero relevance to you. Not being classed as self-employed for NI purposes, nor taking enough salary to trigger employee NICs, both mean that the measures introduced won’t impact you in any way.

High-Income Child Benefit Charge

Some good news for working parents, with a fairer method of calculating the high-income child benefit charge (HICBC).

From April 2024, the rate of income that you’ll need to earn before having to repay any of the HICBC will be £60,000 (up from £50,000), with the level of income before you must repay the whole amount increasing to £80,000 (up from £60,000).

This is a temporary measure, put in place while the whole system is rejigged to ensure it is fairer for working parents going forwards. Current plans are to adapt the HICBC to use a system based on household income by April 2026, rather than assessing each parent/claimant individually.

Changes to Tax on Rental Properties

As expected, following ‘leaks’ over the weekend, the Furnished Holiday Letting (FHL) regime is being abolished. This removes several tax advantages enjoyed by landlords who let their properties as ‘holiday homes’.

One piece of good news for residential landlords, however, is the reduction in the higher rate of Capital Gains Tax on property sales from 28% down to 24%.

If you currently own a rental property (whether being let as an FHL or otherwise) and would like to discuss what this means for you, please get in touch.

Non-Dom Regime to be Abolished

Another piece of legislation that’s been a hot topic for a while, and is now being removed as we know it, is the way that residents of the UK that are not domiciled here are to be taxed.

Under the old rules, those individuals were only taxed on their UK source income, provided they didn’t bring any of their foreign income or gains into the UK. Under the new rules, they will be taxed on their worldwide income regardless, as is the case for other UK residents.

There will be transitional rules in place to ease previously classified ‘non-dom’ individuals into the new regime, which are expected to take effect from April 2025.

VAT Registration Threshold Increased

A less drastic change, but one that’s likely to interest many contractors – from 01 April 2024, the turnover threshold for VAT registration is increasing from £85,000 to £90,000.

If your business is already VAT-registered, then this change will have no impact. Otherwise, this can be a reminder to keep an eye on your turnover, so as not to be caught out by the rules.

Anything Else?

Other key announcements included:

  • ‘Multiple Dwellings Relief’ for Stamp Duty Land Tax to be abolished from June 2024.
  • Planned introduction of the brand-new ‘British ISA’ which allows an additional £5,000 annual tax-free investment.
  • Fuel duty frozen for the 14th year in a row, for another 12 months.
  • Alcohol duty freeze extended from August 2024 until February 2025.
  • Tobacco duty to be increased, whilst a new tax on vaping products is anticipated for October 2026.
  • UK inflation is forecast to fall below the government’s 2% target by the end of June, eventually to 1.5% next year.

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