With a General Election happening in the near future this year’s Spring Statement was expected to be a vote winning exercise rather than a fiscal one.
The Chancellor was keen to stress the gains made by the Conservatives since taking office; increasing employment with a fall in both inflation and borrowing which allows him to make the announced tax cuts. But what are they?
Here are the main highlights of his speech.
-
- National Insurance is to be cut further, with effect from 6th April 2024. The main Class 1 rate for PAYE individuals is reducing from 10% to 8%, and for self-employed individuals from 8% to 6%. This builds on the reduction that applied from 6 January 2024.
- The High Income Child Benefit Charge threshold is changing in April 2024 from £50,000 to £60,000. The rate of the charge is also being halved, meaning that child benefit is not repaid in full until you earn £80,000. The plan is to move to a system based on household rather than individual income, although this is not expected to be in place until April 2026.
- The VAT registration limit is increasing to £90,000 from £85,000. These changes will apply from 1 April 2024.
- A new UK ISA allowance of £5,000 was announced in addition to the existing allowance. This is for funds that are invested in wholly UK-based assets, but this is still under consultation and no date was given for implementation.
- National Insurance is to be cut further, with effect from 6th April 2024. The main Class 1 rate for PAYE individuals is reducing from 10% to 8%, and for self-employed individuals from 8% to 6%. This builds on the reduction that applied from 6 January 2024.
There were several changes announced that relate to property income and chargeable disposals;
-
- From 6 April 2024 the higher rate of CGT for residential property disposals will be cut from 28% to 24%. The lower rate of 18% for gains falling within an individual’s basic rate band remains.
- From 6 April 2025 the furnished holiday let scheme (FHL) will be abolished. This currently gives qualifying property owners some tax advantages such as access to business asset disposal relief; withdrawing the scheme means that these property owners will be taxed on the same basis as landlords. The Government’s hope is that more properties will be available for long term renters.
- From 1 June 2024 Multiple Dwellings Relief (MDR) will be abolished. This affects properties in England and Northern Ireland only.
- From 6 April 2024 the higher rate of CGT for residential property disposals will be cut from 28% to 24%. The lower rate of 18% for gains falling within an individual’s basic rate band remains.
Finally, the Chancellor announced the replacement of the much derided current tax regime for non-UK domiciled individuals (non-doms), with a simpler residence-based regime. Under the new regime anyone who has been tax resident in the UK for more than four years will pay UK tax on foreign income and gains, in line with UK tax residents. This change will take effect from 6 April 2025 with some transitional arrangements to apply.
Murray Beith Murray, Edinburgh
If this article has raised any questions or you would like to discuss your affairs with our specialist tax advisors then please complete our contact form or call 0131 225 1200.
Murray Beith Murray is a private client practice, made up of specialist lawyers from a variety of legal disciplines, including experts in asset protection and estate planning. The firm was established in 1849, as advisors for generations of clients, committed to our values of integrity, expertise and trust. This aim and these values continue to this day as does our commitment to be here when you need us.