In what is likely the final Budget before the forthcoming election, it served up the expected fare with a few minor surprises.
Jeremy Hunt, the Chancellor of the Exchequer, presented the 2024 Spring Budget on 6th March. As predicted, this event, coming ahead of the election, was heavy on tax breaks – notably additional reductions in national insurance contributions (NICs) – and introduced a new savings bond via National Savings. With limited budgetary flexibility, Mr. Hunt couldn’t offer as much as some of his colleagues might have hoped for, but he successfully targeted some key political goals, including adopting Labour’s key policy of abolishing the non-domicile status.
Key announcements
The main headlines and changes to grapple with are:
High income child benefit charge (HICBC): This unpopular tax charge will undergo a two-stage reform. Firstly, in 2024/25, the income threshold rises in 2024/25 with a £10,000 increase from £50,000 to £60,000 with a halving of the rate of charge. As a result, the full 100% HICBC charge will apply once individual income exceeds £80,000. Secondly, by April 2026, the income threshold will be switched from an individual basis to a household basis.
National insurance contributions (NICs): From 6 April 2024, the main rates of employee (class 1) and self-employed (class 4) NICs will be cut by two percentage points to 8% and 6% respectively, doubling down on the cuts announced in last November’s Autumn Statement. The maximum annual saving is £754.
Residential property: In 2024/25, the maximum capital gains tax rate on residential property gains will fall to 24%. The lowered rate may encourage more buy-to-let investors to sell up rather than pay higher mortgage rates at the end of their fixed-rate deals. It may have a similar impact on holiday cottage owners, as the favourable tax rules for furnished holiday lets will be scrapped from April 2025.
UK ISA: The Chancellor issued a consultation paper on a new ‘UK ISA’. This will have a contribution limit of £5,000 – in addition to the existing overall £20,000 ISA limit (unchanged since 2017/18). However, investments will have to be primarily in the UK, probably both shares and bonds. There was no specific timeline on the proposal.
These Budget changes may affect you personally or your business. For more information on any aspect of the implications of the Budget, please contact us at info@smh.group or give us a call on 01142 664 432.
The value of tax reliefs depends on your individual circumstances. Tax laws can change. The Financial Conduct Authority does not regulate tax advice.
The value of your investment can go down as well as up and you may not get back the full amount you invested.
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