Budget Update Spring 2024
Personal Tax
• National Insurance contributions (NICs) – the government has announced a cut to the main rate of Class 1 employee NICs from 10% to 8% from 6 April 2024, and a further cut of 2 pence to the main rate of Class 4 self-employed NICs from 6 April 2024, taking this to 6%. Alongside these cuts, the government announced that it will consult on Class 2 NICs abolition later this year.
• Tax rules for non-UK domiciled individuals – from 6 April 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals. This will be replaced from 6 April 2025 with a new 4-year foreign income and gains (FIG) regime for individuals who become a UK tax resident after a period of 10 years of non-UK tax residence.
• High Income Child Benefit Charge (HICBC) – the government has announced it will raise the HICBC income threshold from £50,000 to £60,000 from 6 April 2024, and the taper will be extended up to £80,000. The government intends to move to a system based on household rather than individual income by April 2026, and will consult in due course.
• Capital Gains Tax (CGT) – the government will legislate to reduce the higher CGT rate for residential property disposals from 28% to 24%. The change will take effect for disposals that take place on or after 6 April 2024. The lower rate of 18% will remain unchanged.
• Abolition of Furnished Holiday Lettings – the government will repeal the current rules for Furnished Holiday Lettings (FHL) for individuals and corporates from April 2025, and will publish draft legislation in due course.
• UK Individual Saving Account (ISA) – the government has announced that it intends to introduce a UK ISA with a new £5,000 allowance, in addition to the existing ISA allowance, and has launched a consultation on its design and implementation.
• Improving Payment Options for Income Tax Self Assessment (ITSA) – the government will improve and simplify HMRC’s digital services to support Income Tax Self Assessment taxpayers seeking to pay tax in instalments.
Business Tax
Tax reliefs – the government has announced measures related to tax reliefs which include:
• New permanent rates of relief (40% and 45%) for theatre, orchestra and museums and galleries exhibition tax, and additional support for independent film through a new UK Independent Film Tax Credit at a rate of 53% for films with budgets under £15 million that meet the conditions of a new British Film Institute test. In addition, the government is providing a 5% increase in tax relief for UK visual effects costs in film and high-end TV, under the Audio-Visual Expenditure Credit (AVEC).
• HMRC will establish an expert advisory panel to support the administration of research and development (R&D) tax reliefs.
Excise and Duties
• Value Added Tax (VAT) – the government has announced a number of VAT related measures, including:
◦ The VAT threshold will increase to £90,000 from 1 April 2024, and the level at which a business can apply for de-registration will increase from £83,000 up to £88,000.
• Vaping Duty – the government will introduce a new duty on vaping products in October 2026, and has launched a consultation on the detailed design and implementation of the duty, which will close on 29 May 2024.
• Stamp Duty Land Tax (SDLT) – a range of SDLT measures have been announced, including:
◦ First Time Buyers’ Relief will be extended to individuals who use nominee and bare trust arrangements when buying a new lease over a dwelling that they intend to use as their main or only residence
◦ The government has announced the abolition of Multiple Dwellings Relief, a bulk purchase relief within the SDLT rules available on the purchase of two or more dwellings. The government will engage with the agricultural industry to determine if there are any particular impacts for the sector that should be considered further.
Tackling the Tax Gap
• Cryptoasset Reporting Framework (CARF) – the government has launched a consultation to seek views on how best to implement the Cryptoasset Reporting Framework and Amendments to the Common Reporting Standard.