A Summary of the Spring Statement 2024
The Chancellor Jeremy Hunt delivered his Spring Statement to Parliament on 6 March 2024. Key announcements that may interest or impact our clients are detailed in the following article. This is not an extensive list of all the announcements and we would encourage you to review the full Spring Statement for further details on the Gov website
Employee National Insurance cut by 2p
From 6 April 2024, the main rate of Class 1 National Insurance Contributions (NIC) will be reduced by 2% from 10% to 8%. Employers will need to ensure their payroll software is updated for this change. The employer rate of Class 1 NIC remains unchanged.
Self-employed National Insurance cut
The self-employment Class 4 National Insurance Contribution (NIC) rate is set to decrease from 9% to 6%. This reduction in the main rate of Class 4 NIC applicable to profits between the personal allowance and £50,270 will come into effect from 6 April 2024. Additionally, as announced in the Autumn Statement 2023, the abolition of Class 2 NIC will also take effect from the same date.
VAT thresholds
On 1 April 2024 the taxable turnover threshold (which determines whether a person or business must be registered for VAT), will be increased from £85,000 to £90,000.
The VAT deregistration threshold will be increased from £83,000 to £88,000 from 1 April 2024.
Capital Gains Tax (CGT) rate reduced
The higher rate of CGT for residential property disposals will be cut from 28% to 24% from 6 April 2024.
This reduction is designed to encourage landlords and second homeowners to sell their properties, making homes available for a variety of buyers, including first time buyers, trying to get on the property ladder.
Changes to high income child benefit charge (HICBC)
From April 2024, the HICBC threshold will increase from £50,000 to £60,000. There will be a tapered charge between £60,000-£80,000. From April 2026, the child benefit tax system will transition to household income assessment instead of individual income, aiming to streamline and enhance fairness within the system.
Furnished Holiday Lettings tax changes
Properties qualifying as a Furnished Holiday Lets (FHL) currently benefit from a number of tax incentives.
Landlords are currently required to make their properties available for at least 210 days a year and rent them out for at least 105 days a year, with restrictions on individual bookings limited to 31 days.
At present, Furnished Holiday Let (FHL) businesses can deduct mortgage interest payments in full from their rental income, claim capital allowances for equipment purchases, consider their earnings as eligible for pension contributions, and benefit from several capital gains tax reliefs upon property sale.
It is anticipated that these tax incentives will be withdrawn by 6 April 2025 and in doing so, the Chancellor hopes these rules will make FHL properties less lucrative and ease the housing crisis in popular tourist destinations.
Non-domiciled status removed
The Government has declared its intention to abolish the remittance basis of taxation for non-UK domiciled individuals, replacing it with a more straightforward residence-based system starting from 6 April 2025. Under this regime, eligible individuals who choose to opt in will be exempt from UK tax on foreign income and gains for the initial four years of their UK tax residency. Transitional measures will be implemented for existing non-UK domiciled individuals over a two-year period.
Furthermore, the Government plans to initiate consultations regarding a transition to a new residence-based regime for Inheritance Tax. This proposed change would effectively eliminate the concept of domicile for most UK taxes.
Multiple Dwellings Relief (MDR) abolished (England and Northern Ireland only)
The Government has decided to abolish Multiple Dwellings Relief. This Stamp Duty Land Tax relief concerning bulk purchases will be implemented for transactions with an effective date on or after 1 June 2024. Transitional rules will be in place to safeguard relief for contracts exchanged on or before 6 March 2024, irrespective of the completion date. However, certain exclusions will apply, such as instances where contract variations occur after 6 March.
Fuel Duty frozen
Fuel duty will remain frozen at its existing rate. The temporary 5p per litre cut on petrol and diesel announced in 2022/23 will continue for an additional 12 months.
Alcohol Duty frozen
Alcohol duty has been frozen again until February 2025.
New levy on vaping products
Commencing October 2026, a levy will be imposed on vaping products and e-cigarettes, payable by manufacturers and importers of vape liquid. This initiative aims to reduce the accessibility and attractiveness of vaping to young individuals and non-smokers. The tax will be structured into bands, with rates escalating as the nicotine content increases.
Increase to Tobacco Duty
A hike in tobacco duties, applicable to cigarettes, cigars, hand-rolling tobacco, and other tobacco products, has been declared effective from October 2026. This adjustment follows the introduction of duties on vaping, aimed at ensuring that the taxation on smoking surpasses that of vaping.
New UK ISA proposed
The UK ISA is anticipated to give individuals an additional £5,000 annual allowance on top of the current individual annual ISA limits of £20,000. Savers can support UK business by investing in UK stocks and get a better return than with traditional savings accounts. More details of this new opportunity will be released after further consultation.
The Government also announced plans to launch British Savings Bonds to be launched through NS&I in April 2024 to guarantee a savings rate for 3 years.
This article was prepared following the Chancellor’s Spring Budget based on official press releases and supporting documentation, and may be subject to amendment before the Finance Act receives Royal Assent. This article is for guidance only, and professional advice should be obtained before acting on any information contained herein.