Spring Budget 2024 – what does it mean for you?

The Chancellor delivered the Spring Budget earlier this week, and we have summarised the key points for you below.

National Insurance

Despite some speculation over the weekend that the Chancellor may cut income tax, he instead chose to cut the rate of National Insurance (NI) by 2%. This comes off the back of a previous cut, which came into effect in January.

For employees, the main rate of Class 1 contributions will be cut to 8%. This will start from 6th April.

In addition to changes previously announced to NI for the self-employed, the main rate of Class 4 contributions will be cut further, to 6%.

Child Benefit

From 6th April, the threshold at which Child Benefit is withdrawn will increase from £50,000 to £60,000. And the rate of withdrawal will be £1 for every £200 of income. This means that the benefit will only be withdrawn entirely once the highest earner’s income exceeds £80,000.

There are also plans to change the system by assessing income on a household basis, rather than on the highest earner. The aim is to introduce this by April 2026.

A new ‘UK ISA’

An additional £5,000 ISA allowance, on top of the existing £20,000 allowance, is to be introduced for savers to invest exclusively in UK assets. A consultation on how this will work in practice will now take place.

Capital Gains Tax

There will be a cut to the higher rate of Capital Gains Tax (CGT) on the disposal of residential property from 28% to 24% from 6th April.

Furnished holiday lets

There are currently special tax rules for rental income from properties that qualify as furnished holiday lets. These are being abolished and from 5th April 2025, they will be taxed in the same way as buy to let properties.

Non-UK Domiciles

From 6th April 2025, the remittance basis of taxation for non-UK domiciled individuals will be abolished. This is to be replaced with a new regime, which is determined by UK residency rather than domicile.

There will also be a consultation on changes to inheritance tax for non-UK doms.

Please do contact your Financial Planner if you would like to discuss how any of these announcements affect you.