The Spring Budget 2024, as presented by Chancellor Jeremy Hunt, has rolled out several significant changes that affect individuals across the UK. From adjustments in National Insurance Contributions (NICs) to reforms in taxation for non-UK domiciled individuals, the budget spans a wide array of financial domains. Neal Groves, Personal Tax Partner at Beavis Morgan, discusses these changes, offering expert insights and advice on navigating the new fiscal landscape.
National Insurance Contributions: A Step Towards Relief
One of the key highlights of this year’s budget is the further reduction in NICs for both employees and the self-employed. Building on the reduction introduced in the Autumn Statement of 2023, the government has announced an additional decrease in the main rate of Class 1 employee NICs from 10% to 8%, starting from April 6, 2024. This measure is set to benefit an estimated 29 million individuals, significantly enhancing the take-home pay for the average worker.
For the self-employed, a notable reduction in the main rate of Class 4 NICs from 9% to 6% marks a significant shift towards recognising and rewarding the entrepreneurial spirit. Neal Groves comments, “This move not only acknowledges the hard work and contributions of the self-employed but also ensures a more equitable tax landscape.”
High Income Child Benefit Charge: A Stride Towards Fairness
The budget also addresses the High Income Child Benefit Charge (HICBC), increasing the income threshold from £50,000 to £60,000 from April 2024. This adjustment, coupled with a reduction in the rate at which the charge is applied, is anticipated to benefit around 485,000 families, providing substantial financial relief.
Additionally, the government’s plans to assess HICBC on a household basis by April 2026 represent a move towards a more equitable system. Neal Groves comments: “This shift acknowledges the complexity of modern financial household planning and is a step in the right direction towards fairness.”
Furnished Holiday Lettings
In a significant policy shift, the Furnished Holiday Lettings (FHL) tax regime will be abolished from April 2025. This change aims to simplify the tax reporting process for individuals, treating short-term furnished holiday lets and longer-term residential lets equally for tax purposes.
Non-UK Domiciled Individuals
In a widely trailled change, the Chancellor confirmedthe current remittance basis of taxation for non-UK domiciled individuals is set to be replaced by a residence-based regime from April 6, 2025. This reform simplifies the tax obligations for non-doms and could potentially make the UK a more attractive destination for international residents.This is still an extremely complex area and there will be transitional measures and scope for non-UK domiciled individuals to plan ahead of the changes. Taking early proactive advice is key to understanding this and Neal Groves urges those affected to get in touch.
Employment and Wages
The Chancellor’s announcement also brings good news for employees and wage earners, with major changes to NICs aimed at reducing the tax burden for millions. Furthermore, the government’s acceptance of the Low Pay Commission’s recommendations means increased rates for the National Living Wage (NLW) and National Minimum Wage (NMW) from April 1, 2024. “This is a positive development for workers, ensuring that wages keep pace with the cost of living,” Neal Groves notes.
Stamp Duty Land Tax (SDLT) and Capital Taxes
The budget introduces changes to the SDLT regime, including the abolition of Multiple Dwellings Relief from 1 June 2024, and adjustments to First-Time Buyer Relief. These changes aim to streamline the property purchase process and make it more accessible to first-time buyers.
In the realm of capital taxes, the Capital Gains Tax rates have been adjusted, and the CGT annual exempt amount will be reduced from £6,000 to £3,000 from 6 April 2024. These modifications necessitate careful financial planning and consideration for individuals looking to manage their investments effectively.
Inheritance Tax and the Road Ahead
While no immediate changes have been made to the Inheritance Tax regime, the government’s intention to move towards a residence-based system signifies potential future shifts that individuals should prepare for. “Those concerned should start planning now, considering the impact of potential changes on their estate planning strategies,” advises Neal Groves.
In conclusion, the Spring Budget 2024 introduces a range of measures aimed at reducing the financial burden on individuals and making the tax system more equitable. As these changes unfold, Neal Groves emphasises the importance of understanding their implications and seeking professional advice to navigate the evolving fiscal environment effectively. “Adapting to these changes with a proactive approach will be key to maximising their benefits and ensuring financial well-being,” he concludes.
For advice and assistance from your individual perspective and that of your family, contactNeal Groves or your usualBeavis Morgan Partner.