Slide Background

The Spring Budget 2024

The long awaited Spring Budget was finally delivered by the Chancellor, Jeremy Hunt, with a focus on long term economic growth and rewarding working people.

The long awaited Spring Budget was finally delivered this week by the Chancellor, Jeremy Hunt. There weren’t too many surprises, but how might the changes announced impact you? Here are the highlights. As well as a written article, we've created an audio summary (above) for those of you who would prefer to listen along, instead.

Reduction in National Insurance Contributions

For those paying National Insurance, a further 2% cut has been announced, taking Class 1 national insurance for employed individuals down from 10% to 8% and taking Class 4 for the self employed down to 6%.

For employees earning £50,000 this latest reduction in national insurance is worth £748.60 each year.

However it is worth noting that tax thresholds are frozen, this means that the tax free personal allowance and income tax thresholds are not due to increase until 2028. According to the Office for Budget Responsibility the national insurance cuts announced, do not offset the extra income tax being paid by the population as a result of the thresholds being frozen.

It is also worth remembering that pensioners will not benefit from the national insurance change as national insurance is only paid by those working who are below state pension age.

Child Benefit Threshold Increases

Under the current system, child benefit is gradually withdrawn for those with adjusted net income of more than £50,000 a year. It means that for households with one earner bringing home £60,000 a year, there isn’t a benefit!

It is proposed that from 6 April 2024 this threshold will increase to £60,000 and for those earning between £60,000-£80,000 a year, child benefit will be gradually withdrawn. This is great news for those households with earnings above £50,000 but below £80,000 who would have previously had to repay some or all of the child benefit claimed but will now be eligible to keep at least some of it.

It was really exciting to hear the Chancellor say that the Government want to reform the Child Benefit system so that eligibility is based on a couple’s combined earnings. As it currently stands, a sole earner of £60,000 gets no child benefit while two earners each on £49,000 will get the full amount. This has always been a frustration of ours and it’s great to see this inequality recognised by the Government. It is worth noting though that these reforms aren’t pencilled in until April 2026.

Changes to Capital Gains Tax

The government will be reducing the higher capital gains tax rate for residential property disposals from 28% to 24%. This will take effect for disposals that take place on or after 6 April 2024. The lower capital gains tax rate for residential property disposals of 18% remains unchanged.

As a reminder, you typically only need to pay capital gains tax on residential property if the property you’re selling is not your main home or if you have let out your main home, used it for business or if it’s very large (the grounds including all buildings are over 5,000 square metres in total).

Introducing the new UK ISA

Plans were announced to introduce a new UK ISA with an annual subscription allowance of £5,000. This will be in addition to the current ISA allowance of £20,000 each tax year. Within the new UK ISA, all investments will be restricted to UK assets only and although the government’s consultation will continue to run until 6 June 2024, it currently suggests that holders will be prevented from holding cash within the new UK ISA.

With many investors favouring overseas rather than UK investments in recent years, this new UK ISA looks to be the government’s way of trying to entice investors back to UK companies and holdings. Let’s see how consultation discussions progress during the next few months.

Tax Rules change for non-UK Domiciled Individuals

Non-doms are individuals whose permanent home, or domicile, is considered to be outside the UK. The current non-dom regime is a favourable tax regime which allows non-doms who are UK resident to opt to use the remittance basis of taxation. This means that whilst they pay tax on their UK income and gains in the same way as UK domiciles, they pay tax on their foreign income or gains only when they are remitted or brought to the UK.

This reform removes preferential tax treatment based on domicile status for all new foreign income and gains which arise from April 2025. It abolishes the remittance basis of taxation for non-doms and replaces it with a new 4 year foreign income and gains regime. New arrivals to the UK will benefit from 100% UK tax relief on foreign income and gains for the first 4 years that they are tax resident here. Once tax resident in the UK for more than 4 years, UK tax will be due on foreign income and gains, as is the case for other UK residents.

So all in all, an interesting mix of changes announced this week, If you would like to talk about any of the areas mentioned above, or any other financial matters, please do not hesitate to contact us – we’d be happy to help.

Important notice:

This article has been based on our understanding of the new rules as we understand them at the time of publishing and could be subject to change.

The Financial Conduct Authority does not regulate tax advice

This article should not be taken as advice.

Tax planning is a complicated area and we would recommend you consult a qualified professional to understand the impact the above rules may have on your personal situation.

Contact Us

Get in touch today

Call us, email, drop in, or fill in the form so that one of our expert advisers can be in touch.

We look forward to hearing from you and being your financial partner.

The Estate Yard
East Shalford Lane