Spring Budget 2024

Here is our overview of the recent Spring Budget 2024 with changes coming into effect from 1st April 2024.

Personal Tax

  • Effective April 6, 2024, the main rate of Class 1 employee NICs will decrease by 2p to 8%, in addition to the 2p cut from January 6, 2024.
  • From April 6, 2024, the main rate of Class 4 NICs for self-employed earners will decrease by 3p to 6%, replacing the previous cut to 8% announced in Autumn Statement 2023.
  • A consultation will be launched later this year to abolish Class 2 National Insurance, with no mandatory payment starting from April 2024, while voluntary payments for contributory benefits will continue.

High income child benefit charge

  • The threshold for the High Income Child Benefit Charge will increase from £50,000 to £60,000, effective April 6, 2024, with a tapered charge between £60,000 and £80,000.
  • A consultation on transitioning to a household-based system will begin from April 2026.

Non-domiciled individuals

  • The current tax regime for non-UK domiciled individuals will be abolished, replaced by a residence-based regime from April 6, 2025.
  • Under the new regime, individuals tax resident in the UK for more than four years will pay UK tax on foreign income and gains, regardless of domicile status, with a four-year relief for new arrivals.
  • Transitional arrangements for existing non-doms include an option to rebase capital assets and a temporary 50% exemption for the taxation of foreign income in the first year of the new regime (2025-26).
  • A two-year Temporary Repatriation Facility will be introduced for individuals paying tax on the remittance basis before April 6, 2025, allowing a 12% rate of tax for bringing previously accrued foreign income and gains into the UK.

Capital gains tax

  • The higher rate of Capital Gains Tax on residential properties will decrease from 28% to 24%, effective April 6, 2024.
  • The lower rate will remain at 18% for gains within an individual’s basic rate band.

Furnished holiday lettings

  • The Furnished Holiday Lettings tax regime will be abolished from April 6, 2025. This will eliminate the tax advantages for landlords who let out short-term furnished holiday properties over those who let out residential properties to longer-term tenants.
  • This means landlords will no longer be able to deduct mortgage interest payments from rental income, no longer be entitled to capital allowances on furniture and will also remove the benefit of lower capital gains tax charged on the sale of the property when sell.
  • Capital Gains Tax Rollover will not be available to those selling their FLHL.

Pensions

  • Defined Contribution pension funds will be required to publicly disclose the breakdown of their asset allocations, including UK equities.
  • Equivalent disclosure requirements for Local Government Pension Scheme Funds in England and Wales may be implemented as early as April 2024.
  • Collaboration with the FCA and pension regulator on the Value for Money pension framework, with regulatory powers to intervene in cases of persistently poor outcomes for savers.

UK ISA and British Savings Bonds

  • A new UK ISA with a £5,000 allowance for investing in UK-focused assets will be introduced.
  • British Savings Bonds, delivered through National Savings and Investments, will provide a guaranteed interest rate fixed for three years, starting April 2024.

Childcare

  • The hourly rate paid to childcare providers for delivering “free” hours for children aged nine months to four years will increase in line with the metric used at the Spring Budget for the next two years.

Transfer of Assets Abroad

  • Legislation in the Spring Finance Bill 2024 will prevent individuals from using a company to bypass anti-avoidance legislation (Transfer of Assets Abroad provisions), effective April 6, 2024.

Investment in HMRC Digital Services

  • HMRC’s digital services will be improved and simplified, supporting Income Tax Self Assessment taxpayers seeking to pay tax in instalments, with changes implemented from September 2025.

IHT Administrative Reform

  • Starting April 1, 2024, personal representatives of estates will no longer need to seek commercial loans for inheritance tax before applying for a “grant on credit” from HMRC.

Business Tax

  • Full expensing will be extended to assets for leasing, with draft legislation to be published shortly.
  • Over £1 billion in new tax reliefs for the UK’s creative industries, including relief for film studios, Independent Film Tax Credit, and increased tax credit for visual effects costs.

Reserved Investor Fund

  • Introduction of a Reserved Investor Fund, a tax-efficient investment fund vehicle for institutional investors, with legislation starting in the Spring Finance Bill 2024.

Investment Zones Programme Expansion

  • Investment Zones will be extended from five to ten years in Scotland and Wales, with full details announced later this year.
  • Details on the Northern Ireland Investment Zone will be published soon.

Energy profits levy

  • Extension until March 2029, with a mechanism tied to oil and gas prices.

R&D tax reliefs

  • HMRC will establish an expert advisory panel to support the administration of the R&D tax reliefs.

Indirect Taxes & Other measures

  • The VAT registration threshold will increase to £90,000, and the VAT deregistration threshold will increase to £88,000, effective April 1, 2024.
  • Rates of fuel duty, alcohol duty, and vaping products duty will be maintained, with increases and changes starting from various dates.
  • Air Passenger Duty for non-economy class flights will increase from 2025-26 to account for high inflation in recent years.
  • Landfill tax rates for 2025-26 will be adjusted.
  • The government will consider findings from the OBR’s review of the 2021 removal of the VAT retail export scheme, along with industry representations and broader data.
  • The difference between road fuel gas and diesel duty rates will be maintained until 2032.
  • A consultation on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC regarding the VAT treatment of private hire vehicles will be launched in April 2024.
  • The VAT Terminal Markets Order (TMO) will be updated, allowing for further reform, including bringing trades in carbon credits within the scope of the TMO.
  • A detailed consultation on the Carbon Border Adjustment Mechanism (CBAM) will be published later in 2024, with implementation starting from January 1, 2027.

Other measures

  • Tax Administration and Maintenance Day will bring forth additional announcements on April 18, 2024.
  • Multiple Dwellings Relief will be abolished from June 1, 2024. This relates to the reduction in the stamp duty land tax charge if the buyer purchases 2 or more properties in single transaction. This will allow the purchaser to calculate tax based on average price across all properties purchased as opposed to the aggregate value.
  • Investments in HMRC’s capacity to collect tax debts, forecasted to raise over £4.5 billion of tax revenue by 2028-29.
  • Introduction of a Crypto-Asset Reporting Framework from 2026 to enhance transparency and compliance in the crypto-asset market.
  • A consultation on raising standards in the tax advice market, exploring options for a strengthened regulatory framework, and requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf has been launched by the government.
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