With the UK entering a technical recession at the end of 2023 and a general election on the cards this year, Chancellor Jeremy Hunt announced the Spring Budget on Wednesday 6th March 2024 that demonstrated fiscal responsibility and generosity.
Dubbing the fiscal statement a ‘Budget for long-term growth”, Hunt focused his speech on delivering tax breaks, boosting investment and tackling unfairness in the UK tax system.
Find out how the measures will affect you and your business.
Some of the biggest announcements covered are:
Individuals
- National Insurance cuts; One of the most significant announcements was the 2p cut to national insurance contributions in April, which is on top of the 2p he already cut in last years Autumn Statement. This means workers will see their NIC rates fall by 4% in less than six months.
- Sole traders and people in business partnerships will also see a lower tax burden in April. Following a 1 percentage point cut in the Autumn Statement, the main rate of Class 4 NICs for the self employed will fall by a further 2 percentage points from 8% to 6% from April.
- Non-Dom Abolishment: The new regime will give new arrivials access to more generous schemes for the first four years they live in the UK. After the four years non-dorms will be required to pay taxes at the same rate as everyone else will is expected to raise £2.7 billion a year by 2028/29.
- Child Benefits Changes: The Government has introduced changes to the High Income Child Benefits Charge (HICBC) fairer for single income families. This will be changing based on household rather than an individual basis by April 2026. From 6th April 2024 the HICBC threshold will change from £50,000 to £60,000, the rate at which HICBC is charged will also be halved so that Child Benefit is not fully withdrawn until individuals earn £80,000 or higher.
- British ISA Introduction: To channel more investment into UK equities, the UK ISA will allow individuals an additional £5,000 per year tax-free, on top of the existing ISA allowance(currently £20,000 per year) to invest in UK-focused assets.
- Capital Gains Tax (CGT) Changes: The higher rate of capital gains tax (CGT)on residential property will be cut from 28% to 24% from April 2024.
- Abolishment of Debt Relief Order: The most vulnerable families will receive targeted support through a £500mextension to the Household Support Fund for an extra six months to September2024. Combined with the Government’s decision to scrap the £90 administration fee for Debt Relief, this will allow local authorities to better support low-income residents with the cost of essentials
- Fuel Duties: The main fuel duty rates will now remain frozen until March 2025 and the temporary 5p cut to the duty has also been extended. The Government estimates these measures will save car drivers around £50 in 2024/25 and £250 since the 5p cut was introduced, resulting in a total £5bn tax cut across the nation.
Business
- VAT Registration Threshold: In a boost for small businesses, the VAT registration threshold will increase from £85,000 to £90,000 from 1 April 2024. This marks the first increase in seven years.
- Furnished Holiday Lettings Regime: In a move to make the property market fairer for renters, the Furnished Holiday Lettings (FHL) regime will be abolished from April 2025. The change aims to increase long-term rental options for locals and raise tax receipts to help fund national insurance cuts. It is estimated that the change will raise around £300m from landlords who benefited from the furnished holiday lettings scheme.
- Funding business growth: Providing£200m of funding to extend and rename the Recovery Loan Scheme to the ’Growth Guarantee Scheme’ ,helping SMEs access necessary financing.
- Encouraging investments: Publishing updated HMRC guidance on the tax deductibility of training costs for sole traders and the self-employed to encourage productivity-boosting investments. Reinstating the previous eligibility criteria for qualifying as a high net worth or sophisticated investor, along with reviewing the scope of these exemptions.
- Pension reforms: Continuing work on the Mansion House reforms to the pension system, with the goal of unlocking up to £75bn of pension fund capital.
- Recovery Loan Scheme: The Government will extend the Recovery Loan Scheme, rebranding it as the Growth Guarantee Scheme. This program aims to help around 11,000SMEs access the financing they need to invest and expand.
- Investment zones: In April, the first investment zones will launch in the North of England and the Midlands. These zones will offer tax breaks and planning liberalisations to attract business investment.
- Building on the £750m R&D package announced in the 2023 Autumn Statement, the Chancellor unveiled several new measures:£14m to boost the UK’s public sector research and innovation in frastructure. Establishing an HMRC expert advisory panel to improve the administration of R&D tax reliefs. The panel will provide insights into the cutting-edge R&D occurring across sectors such as tech and life sciences, and work with HMRC to review relevant guidance, ensuring it remains up to date and provides clarity to claimants.
- Creatives Industries: 53% tax credit for eligible independent British films with budgets under£15m. 40% business rates relief until 2034 for eligible film studios.5% increase in relief for UK visual effects. Funding for 200 new apprenticeships per year at the National Film and Television School. Permanent higher tax relief rates of 45%/ 40% for theatres, museums, galleries and orchestras.
- Green Industries: An additional £120m allocated to the £1bn Green Industries Growth Accelerator for low-carbon manufacturing supply chains. Largest ever £1bn+ renewable energy auction round announced. £160m deal with Hitachi to purchase two prospective nuclear power plant sites on Anglesey and in Gloucestershire that had been mothballed.
- Digital and AI: Plans to be set out to ensure access to public computing facilities for developing AI products. £7.4m fund to support SME AI skill development. SME Digital Adoption Taskforce to investigate boosting productivity through technology. The Alan Turing Institute to receive up to £100m over five years.
- Life Sciences: Following the £520m in manufacturing funding announced in the Autumn Statement, the Government has confirmed large-scale investment competitions for this summer and an SME track in autumn. £45m to support early-career medical researchers specialising in conditions such as dementia, epilepsy and cancer, including £3m for Cancer Research UK.
If you have any questions on how any area covered affects you or your business please don't hesitate to get in touch!
