The Spring Budget has brought several important changes to fiscal policy and economic forecasts. Below I outline some of the important points that I have gleaned from the announcement.
Table of Contents
National Insurance Cuts for Employees and the Self-Employed
The government has announced reductions in National Insurance rates for both employees and the self-employed. These changes aim to provide financial relief and support businesses during these challenging times.
Starting from April 6, 2024, the main rate of Class 1 National Insurance Contributions (NIC) for employees will be reduced by 2% from 10% to 8%. This reduction will have a direct impact on employees’ take-home pay, allowing them to keep more of their money.
For self-employed individuals, the Class 4 NIC rate will also reduce from 9% to 6% for profits between the personal allowance and £50,270, starting from the same date. This reduction in self-employment national insurance will help alleviate the financial burden on self-employed workers and encourage entrepreneurship.
Changes to Tax Incentives for Property Investors
The Spring Budget has announced changes to tax incentives for property investors. These changes will have a significant impact on those involved in the property market in the UK. Let’s have a closer look at the key changes:
Furnished Holiday Let Status
One of the important changes for investors is the abolition of the Furnished Holiday Let (FHL) status. Currently, properties that meet certain criteria and qualify as FHLs enjoy tax benefits. However, this status will be abolished from April 6, 2025. This means that property investors relying on the FHL tax benefits will need to reconsider their tax planning strategies.
Capital Gains Tax Rate for Residential Property Disposals
Another significant change is the reduction in the capital gains tax (CGT) rate for residential property disposals. Currently set at 28%, the CGT rate for residential property will be reduced to 24% from April 6, 2024. This change will have an impact on property investors looking to sell residential properties and will likely affect their financial decisions.
Multiple Dwellings Relief for Stamp Duty Land Tax
In England and Northern Ireland, property investors have been able to benefit from the Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax. However, the Spring Budget has announced that the MDR will be abolished from June 1, 2024. This change will have implications for property transactions involving multiple dwellings, potentially affecting the overall cost of acquiring such properties.
Changes to Child Benefit and VAT Thresholds
Jeremy Hunt also announced significant changes to child benefit and VAT thresholds. These changes will have a direct impact on families and businesses across the country.
High Income Child Benefit Charge (HICBC) Threshold
From April 2024, the High Income Child Benefit Charge (HICBC) threshold will be increased from £50,000 to £60,000. This means that families with an income above the new threshold will be liable to pay the charge, which reduces their child benefit entitlement. By raising the threshold, the government aims to reduce the number of families affected by this tax, providing relief for those on higher incomes.
VAT Taxable Turnover Threshold
Starting from April 1, 2024, the VAT taxable turnover threshold will be increased from £85,000 to £90,000. This threshold determines when a business is required to register for VAT. Smaller businesses can choose to register for VAT even if they make less than that amount. This gives them the flexibility to decide whether or not to deal with VAT-related paperwork, making it easier for them to grow and make more profit.
Other Key Announcements from the Spring Budget
The Spring Budget also includes several other key announcements that will have significant implications for individuals and businesses across the UK.
Non-Domiciled Status
The removal of non-domiciled status for non-UK domiciled individuals. Starting from April 6, 2025, this status will no longer provide tax advantages to those who are not domiciled in the UK.
Recovery Loan Scheme
The extension of the Recovery Loan Scheme until March 31, 2026. This scheme provides crucial financial support to small and medium-sized enterprises (SMEs) that have been impacted by the COVID-19 pandemic.
Fuel Duty and Alcohol Duty
In a bid to alleviate financial burdens on consumers, the government has decided to freeze fuel duty and alcohol duty. This means there will be no increase in taxes for these products.
Vaping Products Levy
A new levy on vaping products will be introduced. This measure aims to discourage the use of vaping.
Tobacco Duty
In an effort to deter smoking tobacco duty will see an increase.
Air Passenger Duty
Air passenger duty for non-economy flights will rise from April 2025. This increase aims to address environmental concerns and promote sustainable travel.
|
Announcement |
Date |
|
Non-Domiciled Status |
April 6, 2025 |
|
Recovery Loan Scheme |
Extended until March 31, 2026 |
|
Fuel Duty |
Frozen |
|
Alcohol Duty |
Frozen |
|
Vaping Products Levy |
Introduced |
|
Tobacco Duty |
Increase |
|
Air Passenger Duty |
Rise from April 2025 |
Conclusion
The chancellor presented a balanced spring budget and there have certainly been tax savings for both the employed and employed but nothing for those that own and run limited company’s. Its a budget with one eye on the forthcoming general election and no doubt there will be another immediately after that whichever side enters government so be prepared for another budget this year
FAQ
What are the main changes to National Insurance in the Spring Budget?
Reduction in the main rate of Class 1 National Insurance Contributions (NIC) for employees by 2%, from 10% to 8%, starting from April 6, 2024. For self-employed individuals, the Class 4 NIC rate will be reduced from 9% to 6% for profits between the personal allowance and £50,270 from the same date.
What changes were announced regarding tax incentives for property investors?
Abolition of the Furnished Holiday Let (FHL) status, which currently grants tax benefits to qualifying properties, starting from April 6, 2025. Additionally, the capital gains tax (CGT) rate for residential property disposals will be reduced from 28% to 24% from April 6, 2024. In England and Northern Ireland, the Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax will also be abolished from June 1, 2024.
What changes were made to child benefit and VAT thresholds in the Spring Budget?
Increased the High Income Child Benefit Charge (HICBC) threshold from £50,000 to £60,000 starting from April 2024. This change will reduce the number of families required to pay this tax. In addition, the VAT taxable turnover threshold will be increased from £85,000 to £90,000 from April 1, 2024.
What other key announcements were made in the Spring Budget?
It was announced that the non-domiciled status will be removed for non-UK domiciled individuals starting from April 6, 2025. The Recovery Loan Scheme for SMEs has been extended until March 31, 2026. Fuel duty and alcohol duty will be frozen, while a new levy on vaping products and an increase to tobacco duty will be introduced. Air passenger duty for non-economy flights will also rise from April 2025.
