Spring Budget 2024: What Does It Mean For You?

In what may be his last budget announcement before the election, Jeremy Hunt unveiled several tax and expenditure initiatives impacting businesses and individuals across the UK.

Dubbed as a ‘Budget for Long Term Growth’, the Chancellor claimed the announcement is aimed at ensuring reduced taxes, increased investment, and improved public services.

The Chancellor introduced additional reductions in National Insurance, an uplift in the VAT registration threshold, and adjustments impacting travel, lending, property management, among other areas crucial to small business owners and landlords.

Below we look at the key announcements in the budget and what they mean for business owners and consumers.

National Insurance Reduced Again

The headline announcement involved the Chancellor declaring further reductions in National Insurance (NI), following on from reductions in the Autumn 2023 budget.

Starting from April 6th, the primary rate for Class 4 self-employed NI contributions will decrease to 6%, marking a further reduction of 2% on top of the previously announced 1% cut in the Autumn Statement.

Projections indicate that starting from April 2024, employees contributing to Class 1 National Insurance (NI) could see annual savings ranging from £249 to £754, depending on their earnings. For instance, an individual with a yearly income of £35,000 is expected to save £450.

Self-employed individuals will benefit from reduced Class 4 NI contributions. Initially set to decrease by one percentage point to 8% in April, the rate has been further reduced to 6%.

Despite this tax saving, the threshold at which income tax and NI contributions become payable on earnings will remain unchanged, meaning that individuals will contribute more in taxes as their salaries increase.

Support for the Hospitality Sector

In a positive announcement for UK hospitality businesses, Jeremy Hunt has decided to extend the freeze on alcohol duty until February 2025, averting a potential three percentage point hike. This move aims to assist pubs, restaurants and other hospitality businesses in maintaining affordable prices on alcohol.

VAT Registration Threshold Increase

From April 1st, 2024, the VAT registration threshold will be raised from £85,000 to £90,000.

Businesses with annual VAT-able sales over this threshold in the past 12 months, or expecting to exceed this limit within the next 30 days, must register for VAT. This change means businesses can increase their turnover without fear of incurring the extra 20% they need to bill customers.

If you have moved over the threshold and require help with your VAT return, please see our VAT return services page.

Capital Gains Tax Reduction for Property

From April 6th, 2024, the higher Capital Gains Tax (CGT) rate on residential properties will decrease from 28% to 24%. The lower rate will continue at 18%.

New ISA Introduction and Increased Allowance

A new UK ISA will be introduced, offering tax-free savings opportunities with an allowance of £5,000, in addition to the current ISA allowance. This raises the tax-free investment allowance from £20,000 to £25,000.

Recovery Loan Scheme Enhancement

The Chancellor also revealed a £200 million funding initiative aimed at supporting small businesses in their efforts to invest and expand. This funding serves as a continuation of the government’s Recovery Loan Scheme, introduced in the wake of the pandemic. To qualify for a loan, UK businesses must generate less than £45 million in turnover, be operational, and not facing financial distress.

Furnished Holiday Lettings Tax Regime to be Discontinued

In bad news for holiday let and Airbnb owners, the Chancellor announced the discontinuation of the Furnished Holiday Lettings tax regime. Under the current Furnished Holiday Lettings tax regime, rental income from eligible properties benefits from specific rules and benefits, including Capital Gains Tax reliefs and capital allowances. These tax advantages are set to be eliminated starting from April 2025.

On the other hand, the government anticipates this move will generate £245 million annually, simultaneously facilitating easier access to homes within communities where a high percentage of properties are utilised as holiday lets.

High-Income Child Benefit Charge Threshold Uplift

The threshold for the High Income Child Benefit Charge will increase from £50,000 to £60,000 from April 6th, 2024, meaning more parents are eligible for child benefits.

The taper on this benefit will also increase up to salaries of £80,000, meaning only those earning over this amount aren’t eligible for any support.

Linggard & Thomas: Empowering your Business to Succeed‍

Keeping up with the ever-evolving world of finances can be a challenge, which is where we can help.

Linggard & Thomas are Cornwall-based chartered accountants that can help you understand the numbers and help your business thrive. Whether you need support with your tax return, bookkeeping or annual accounts, our team is here to help.

Get in touch today to see how we can help your business succeed.

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