Spring Budget 2024

The Chancellor unveiled his Spring Budget on 6 March 2024. There were a number of noteworthy announcements included — some of the key items are covered below.

For Businesses

Capital Allowances

It was announced that there will be a consultation for the possible expansion of full expensing to include plant and machinery for leasing. This extension will take effect ‘when fiscal conditions allow’.

Oil and Gas

There will be an extension of the Energy Profits Levy (the 35 percent levy on profits arising from the upstream production of oil and gas) for an additional year to 31 March 2029.

VAT registration threshold

The VAT registration threshold will increase from £85,000 to £90,000. There will also be an increase in the deregistration threshold from £83,000 to £88,000. These threshold changes are effective from 1 April 2024.

UK ISA

A new UK ISA with an allowance of £5,000 per annum is to be introduced to encourage investment in UK incorporated businesses listed or admitted to trading on a UK recognised stock exchange.

Stamp Duty Land Tax — Multiple Dwellings Relief

Government has Multiple Dwellings Relief will be abolished effective from 1 June 2024. Contracts that complete before this date will benefit from the relief as will transactions where contracts were exchanged on or before 6 March 2024.

For Employers

National Insurance Contributions (NIC)

From 6 April 2024 the Employee Class 1 NIC main rate will reduce from 10 percent to 8 percent. For the self-employed, from 6 April 2024 the Class 4 NIC rate will be cut from 8 percent to 6 percent. At the Autumn Statement it was announced that the requirement to pay Class 2 NIC would end from 6 April 2024 (though voluntary contributions may still be made), and that Class 2 NIC would subsequently be abolished.

Non-Dom Workers

The existing tax regime for non-domiciled individuals will be abolished from 6 April 2025 and replaced with a new residence-based system known as the Foreign Income and Gains (FIG) regime. Broadly, this will tax all individuals who are resident in the UK for more than four tax years on foreign income and gains on the same basis — regardless of domicile status. Individuals who are UK resident for four tax years or fewer, and who have not been UK resident for a period of ten years prior to becoming UK resident, may opt to be taxed only on UK income and gains, and will be able to remit overseas income and gains tax free.

Umbrella Companies

HMRC has published guidance on how it is expected organisations will exclude non-compliant umbrella companies from their labour supply chains. An update on is scheduled for 18 April 2024. New guidance for workers and organisations who engage with umbrella companies will also be published in Summer 2024.

Pensions

It was announced that a lifetime provider model for Defined Contribution (DC) pension schemes over the long-term (‘pension pot for life’) will continue to be explored.

For Individuals

Non-domiciled status

The tax regime for non-UK domiciled individuals will be replaced from 6 April 2025. Under the new regime, there will be no UK tax on foreign income and gains for the first four years of UK tax residency, where individuals have not been UK resident in the previous 10 consecutive tax years. This will allow qualifying individuals to bring their foreign income and gains to the UK without a tax charge.

Overseas workday relief will remain available to those individuals on a simplified basis. After four years, individuals will be subject to UK tax on their worldwide income and gains.

Inheritance Tax (IHT)

There will be a consultation on moving IHT to a system based on residence. It has been suggested that from 6 April 2025 UK assets will be within the scope of IHT regardless of the residence of the owner (as is currently the case), with non-UK assets coming within scope after 10 years of residence. For individuals leaving the UK, it is suggested that non-UK assets would remain in scope for at least 10 years after residence ceases and possibly longer depending on ‘other connecting factors’.

Capital Gains Tax (CGT) on residential property

The higher rate of CGT for residential property disposals by individuals, trustees and personal representatives will be cut from 28 percent to 24 percent from 6 April 2024. The lower rate will remain at 18 percent for any gains that fall within the basic rate band. This rate reduction will benefit non-residents with homes in the UK, investment property owners, and those with second homes.

Furnished Holiday Lettings (FHL) tax regime

The FHL regime is to be abolished from April 2025. FHL are presently treated as a trade for tax purposes so abolishing this regime will mean that FHL properties and the associated income will have the same treatment as other residential property for income tax, CGT and IHT purposes. FHL also qualify for some special treatment for both CGT and IHT and this is expected to no longer be available.

Child Benefit

The High Income Child Benefit Charge (HICBC) threshold will be increased from £50,000 to £60,000 from April 2024.

Authored by: Cambridge Team