Spring Budget 2024 summary and highlights

Employees and the self-employed will be pleased to see further reductions in National Insurance, while property investors see both tax wins and losses depending on the nature of their property investments. 

Families with children will see the tax system become fairer and “non-dom” taxpayers will see fundamental changes to how they are taxed in the UK. 

Mr Hunt’s main focus remains on reducing inflation to 2% and progress so far has given scope for him to make the announcements today. The main changes affecting you and your business are outlined below. 

Employee National Insurance cut  

Employees can look forward to savings from 6th April 2024, with the main rate of Class 1 National Insurance Contributions (NIC) being reduced by 2% from 10% to 8%. This is following the Autumn Statement 2023 announcement that the main rate of class 1 NIC would be reduced from 12% to 10% from 6th January 2024. 

The employer rate of Class 1 NIC remains the same and employers will need to ensure their payroll software is updated for this change. 

Self-employment National Insurance cut 

Self-employed individuals will see savings following the announcement that the self-employment Class 4 NIC rate will be reduced from 9% to 6%. This reduction in the main rate of Class 4 on profits between the personal allowance and £50,270 will take effect from 6th April 2024. The Autumn Statement 2023 announced the abolition of Class 2 NIC will also take effect from the same date. 

Furnished Holiday Letting status to be abolished 

Those who have a property which qualifies as a Furnished Holiday Let (FHL) currently benefit from a number of tax incentives.  

The FHL regime requires landlords to make their properties available for at least 210 days a year and rent them out for at least 105 days a year, with each booking limited to 31 days.  

FHL businesses are currently able to deduct the full cost of mortgage interest payments from their rental income, claim capital allowances for items of equipment, treat their earnings as qualifying for pension contributions and claim various capital gains tax reliefs when they sell the property. 

From 6th April 2025, it is anticipated that these tax incentives will be withdrawn. The Chancellor hopes that scrapping these rules and making FHL properties less lucrative will ease the housing crisis in popular tourist destinations. 

Draft legislation will be published in due course and include an anti-forestalling rule which will apply from 6th March 2024. 

Capital Gains Tax (CGT) rate reduced 

Investors in property currently pay capital gains tax on residential property disposals at rates of 28%, or a reduced rate of 18% for any gains that fall within an individual’s basic rate band. 

The higher rate of CGT for residential property disposals will be cut from 28% to 24% from 6th April 2024. The lower rate will remain at 18%. 

The main reason given for the reduction is to encourage landlords and second homeowners to sell their properties, making homes available for a variety of buyers including those looking to get on the housing ladder for the first time. 

The Private Residence Relief rules will remain in place, meaning the majority of residential property disposals will continue to pay no CGT. 

High income child benefit charge changes 

A change to the High Income Child Benefit Charge (HICBC) thresholds has been announced, as well as a reform to the system.  

From April 2024, the HICBC threshold will be increased to £60,000 from £50,000, meaning fewer parents and families will pay this tax. The rate of tax has also been halved, so that only an individual earning £80,000 (previously £60,000) would need to pay tax equal to child benefit received for the year. 

From April 2026, the child benefit tax system will be based on household income rather than individual income, making the system simpler and fairer. 

VAT thresholds increased 

From 1st April 2024, the taxable turnover threshold which determines whether a person or business must be registered for VAT, will be increased from £85,000 to £90,000. 

The VAT deregistration threshold, which determines whether a person may apply for deregistration, will be increased from £83,000 to £88,000 from 1st April 2024. 

Non-domiciled status removed  

The Government announced it will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime, from 6th April 2025. The intention is that eligible individuals who opt into the regime will not pay UK tax on foreign income and gains for the first four years of UK tax residence. 

Transitional arrangements for existing non-UK domiciled individuals will be introduced for two years. 

The Government also announced it will consult on moving to a new residence-based regime for Inheritance Tax, which would effectively remove the concept of domicile for most UK taxes. 

Stamp Duty Land Tax — Multiple Dwellings Relief (MDR) abolished (England and Northern Ireland only) 

The Government will abolish Multiple Dwellings Relief. This Stamp Duty Land Tax relief is a bulk purchase relief and will come into effect for transactions with an effective date on or after 1st June 2024. Transitional rules will protect relief for contracts which are exchanged on or before 6th March 2024, regardless of when completion takes place. However, this is subject to various exclusions, for example where variations to the contract are made after 6th March. 

New UK ISA under consultation 

There are plans to introduce a UK ISA to direct investment into UK assets. The UK ISA is anticipated to give individuals a new and additional £5,000 annual allowance on top of the current individual annual ISA limits of £20,000. This ISA will have all the tax advantages of other ISAs, including tax-free dividends and interest. More information will be released following a consultation. 

The Government also announced plans to launch a British Savings Bond launching in April 2024 by National Savings & Investments (NS&I), with a fixed interest rate for three years. 

Recovery Loan Scheme for SMEs 

The Recovery Loan Scheme has been extended to support Small and Medium-sized Enterprises (SMEs). The support scheme will be renamed as the Growth Guarantee Scheme and supports SMEs to access finance. The scheme will now be in place until the end of March 2026, offering a guarantee on loans of up to £2 million in Great Britain and £1 million in Northern Ireland. 

Fuel Duty frozen 

The Chancellor confirmed that fuel duty will remain frozen at its existing rate, giving a further tax break to British motorists. The temporary 5p per litre cut on petrol and diesel announced in 2022/23 will continue for an additional 12 months. 

Alcohol Duty frozen 

Alcohol duty has been frozen again until February 2025. 

New levy on vaping products 

A new levy on vaping products and e-cigarettes will be introduced from October 2026, and charged to manufacturers and importers of the liquid in vapes. The introduction is the hope to make vaping less accessible and appealing to young people and non-smokers. The tax will be charged at bands that increase as the level of nicotine increases. 

Increase to Tobacco Duty 

A one-off increase to tobacco duties levied on the purchase of cigarettes, cigars, hand-rolling tobacco, as well as other forms of tobacco, has been announced from October 2026. This increase comes following the introduction of the duties on vaping aiming to ensure that the tax on smoking is greater than vaping tax. 

Air passenger duty rises 

Air passenger duty for travellers on non-economy flights will rise to account for inflation from April 2025. The rates for economy domestic or short-haul flights will remain frozen. 

Keep up to date with future announcements 

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Date published 26 Feb 2024 | Last updated 6 Mar 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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