Spring Budget 2024 – No Surprises, but Plenty to Digest
In years gone by, the annual Budget was an event wrapped in mystery. National insurance contributions often featured prominently.
The sight of the Chancellor holding up the Red Box outside 11 Downing Street sparked genuine suspense. Few people knew what was inside until it was revealed in Parliament.
This year felt very different. Most of the key announcements had already been predicted in the morning papers. By the time the Chancellor rose to speak, there were few surprises left to unveil. Television pundits speculated about whether Jeremy Hunt might pull “a rabbit from his hat.” However, when the time came, the hat contained only what had been expected.
Headline Measures
The most significant new announcement was the further reduction in National Insurance Contributions (NICs). This was on top of the cuts already introduced in the Autumn Statement 2023.
While this measure will cost the Government an estimated £10 billion per year in lost revenue, it represents a meaningful tax saving for working people.
By contrast, an equivalent cut to income tax would have been far more expensive. It would affect all taxpayers, including those not in work. Perhaps that is a “rabbit” being held back for later. This would be closer to the General Election, which must take place within the next year.
Other Key Announcements
One of the most welcome measures was the long-overdue increase in the High-Income Child Benefit Charge (HICBC) threshold. This is rising from £50,000 to £60,000 for 2024/25.
This is expected to deliver a tax benefit worth over £500 million a year to families.
Meanwhile, the long-debated reform of the “non-domicile” (non-dom) tax regime will proceed from April 2025. It will replace the long-standing remittance basis with a residence-based system.
This change is forecast to raise just under £3 billion annually from 2026/27 onwards.
Given that the Labour Party had long advocated for such a reform, there may be some irony. It is being enacted by a Conservative Chancellor.
The Capital Gains Tax (CGT) rate on residential property disposals will also be cut from 28% to 24% from 6 April 2024. This is a move expected to stimulate sales and encourage landlords to dispose of second homes or rental properties.
Elsewhere, the Government confirmed the end of Furnished Holiday Let (FHL) tax advantages from April 2025. Additionally, an increase in the VAT registration threshold to £90,000 from 1 April 2024 was announced — the first rise in seven years.
A Familiar Pattern
Although the Chancellor did not unveil any dramatic surprises, the accompanying Budget papers — released online as soon as he sat down — contain a wealth of detail.
As ever, the impact of the Budget cannot be judged only by its headline measures. It must also be assessed by changes from previous announcements that are now taking effect.
The freezing of income tax allowances and thresholds remains a major factor in increasing overall tax receipts. Even as headline rates are reduced elsewhere, many taxpayers will continue to experience “fiscal drag”. Pay rises push them into higher bands despite unchanged rates.
In This Edition
In this Spring Budget summary, we:
- Explain the latest proposals and their impact on individuals and businesses;
- Review changes announced in previous statements that take effect from April 2024; and
- Provide practical insights to help you understand what these developments mean for you.
If you would like to discuss how the changes affect your personal or business tax position, our team will be happy to help.
Significant Points from the Spring Budget 2024
- Personal tax rates and allowances on income remain frozen at current levels.
- Further cuts to National Insurance Contributions for employees and the self-employed, effective April 2024.
- Threshold for the High-Income Child Benefit Charge increased from £50,000 to £60,000 (full withdrawal now at £80,000).
- Maximum rate of Capital Gains Tax (CGT) on residential property reduced from 28% to 24% from 6 April 2024.
- Abolition of the Furnished Holiday Let (FHL) regime from 6 April 2025.
- Reform of the “non-dom” tax regime, moving to a residence-based system from April 2025.
- VAT registration threshold increased to £90,000 from 1 April 2024.
If you would like tailored advice on how these measures affect you — from National Insurance and dividends to property sales or Child Benefit — please contact us.
We’ll be happy to help you navigate the changes and identify opportunities to reduce your overall tax burden.
Find more from our spring budget below:
