Spring BUDGET 2024
SPRING BUDGET OVERVIEW
Yesterday Chancellor Jeremy Hunt announced the 2024 Spring Budget, which in an environment with apparently little room to manoeuvre sees little change for business owners. Sadly, there’s no reversal of the last corporation tax increases, dividend allowance reduction, or dividend tax rate increases, but there were a few snippets for individuals.
VAT THRESHOLD
After seven years of being frozen at £85,000, the VAT registration threshold will be increased to £90,000 on 1 April 2024, with the de-registration threshold also increasing to £88,000. While this is a positive change for some smaller businesses, it will likely have only a marginal impact.
REDUCED CAPITAL GAINS TAX ON RESIDENTIAL PROPERTIES
The higher rate band for Capital Gains Tax on non-primary residential properties has decreased from 28% to 24% for property sales that exchange on or after 6 April 2024. Another change is that furnished holiday lettings will be treated as property investment businesses from 6 April 2025, increasing the tax burden on these assets.
FULL EXPENSING MADE PERMANENT
Capital Allowance full expensing, which allows you to deduct 100% of capital equipment cost from profit in the year purchased, has been made permanent from the scheduled end date of March 2026.
HIGH INCOME CHILD BENEFIT CHARGE
The current threshold before the Child Benefit is clawed back is £50,000, with it fully repayable at £60,000. This threshold is being increased to £60,000 and fully repayable at £80,000. There are plans in the future for this to be evaluated on a total household income basis, but that is beyond the next election.
NATIONAL INSURANCE CHANGES – AFFECTS EMPLOYEES
There have been further cuts to the NIC rates on top of the Autumn budget changes which came into effect in January. This impacts the amount of NICs employees pay, but not employers.
Further reduction in employee Class 1 NIC rate from 10% to 8% payable on earnings between £12,570 and £50,270, effective 6 April 2024. This increases your employees’ take-home pay, and you pay no more.
For self-employed/sole traders – Class 2 NICs abolished, effective 6 April 2024.
For self-employed/sole traders – Class 4 NIC rate reduced from 9% to 6%, charged on profits between £12,570 and £50,270, effective 6 April 2024. This is a further decrease from the 8% previously proposed.
No change to Personal Allowance or National Insurance thresholds.
Important Dates
1st April: National Living/Minimum Wage increase
5th April: Fiscal Year End – pension & ISA contributions must be paid by then
6th April: Start of 2024/25 fiscal year
31st May: P60 issue deadline
6th July: P11D Submission deadline
9 Months after your EOY: Corporation Tax is due for payment