Spring Budget 2024
Chancellor Jeremy Hunt unveiled a "long-term growth" plan in the 2024 Spring Budget. Let's delve deeper into the key announcements and their specific details:
Personal Tax:
- National Insurance Reduction: The main rate of National Insurance for employees will be slashed to 8%, effective April 2024. This translates to a significant increase in take-home pay for many workers. The government is also cutting a further 2p from the main rate of self-employed National Insurance reducing this to 6%.
High Income Child Benefit Charge
The 2024 Spring Budget offered some relief for high-income families claiming child benefit with changes to the High-Income Child Benefit Charge (HICBC):
- Increased Income Threshold: The income threshold at which the HICBC applies has been raised from £50,000 to £60,000 per year, effective April 6th, 2024. This means more families will be able to claim the full child benefit amount without facing a charge.
- Reduced Charge Rate: For those with adjusted net income exceeding £60,000 but below £80,000, the HICBC charge rate has been halved. Previously, 1% of child benefit was clawed back for every £100 of income exceeding £50,000. Now, the charge is 1% for every £200 of income exceeding the new £60,000 threshold. This adjustment lessens the financial impact of the charge for families in this income bracket.
- Gradual Phase-Out: It's important to note that these changes are a temporary solution. The Chancellor announced plans for a more fundamental reform by April 2026, aiming to base the charge on household income rather than individual income. This could potentially offer a fairer system for families with dual incomes.
Overall, the changes to the HICBC provide some welcome breathing room for families claiming child benefit. While the long-term reform remains to be seen, these adjustments offer some immediate financial benefits.
Furnished Holiday Lets: A Change on the Horizon
The 2024 Spring Budget also included an announcement impacting the furnished holiday let (FHL) sector. While not a tax cut, it's an important change for property owners who utilise the FHL tax regime:
- Abolition of the FHL Tax Regime: The government announced the FHL tax regime's abolition, effective April 6th, 2025. This regime offered specific tax advantages for properties rented out as short-term holiday lets.
It's important to note that this is a future change and won't affect the 2024 tax year. However, property owners who rely on the FHL scheme should begin planning for the transition in April 2025. They'll need to adjust their tax strategies and potentially face increased tax burdens.
Boost for Businesses:
- Extended Business Rate Relief: The 75% business rate relief for eligible retail, hospitality, and leisure properties will be extended for another year (2024-25). This tax cut amounts to £2.4 billion and aims to support businesses still recovering from the pandemic's impact.
- Increased VAT Threshold: The VAT registration threshold will rise from £85,000 to £90,000. This means many small businesses won't have to register for VAT, reducing their administrative burdens and saving them money.
- Creative Industries Relief: Over £1 billion of new tax reliefs were announced for the UK's creative industries. Specific details haven't been released yet, but this initiative aims to incentivize investment and growth in this vital sector.
Savings and Investment Incentives:
- New UK ISA: A brand new UK ISA offering a £5,000 annual allowance for tax-free investment in UK-focused assets like stocks and bonds was introduced. This initiative encourages domestic investment and potentially boosts returns for savers.
- British Savings Bonds: National Savings and Investments will launch new British Savings Bonds. These bonds will offer a guaranteed interest rate fixed for three years, providing a safe and predictable option for savers seeking steady returns.
Want to learn more about TidyCloud?
You'll find lots of helpful information in our information pack