Spring Budget 2024: Key Announcements from the Chancellor

On the 6th of March, all eyes were on the Chancellor, Jeremy Hunt, as he unveiled the much-anticipated Spring Budget, outlining the government’s fiscal plans and economic policies for the coming year. Among the plethora of announcements, several key changes stood out, promising to impact the lives of individuals and businesses across the nation. Here, we delve into the highlights of the Spring Budget 2024: 

Reduction in National Insurance Contributions (NICs)

One of the most significant announcements made by the Chancellor was the reduction in National Insurance Contributions (NICs). Effective from 6th April 2024, the main rate of Class 1 employee NICs will be reduced from 10% to 8%, providing welcome relief to millions of workers. Additionally, the main rate of Class 4 self-employed NICs will also see a reduction, dropping from 8% to 6%. These changes aim to ease the financial burden on both employees and self-employed individuals, fostering economic growth and incentivizing employment.

Reform of High Income Child Benefit Charge (HICBC)

In a move aimed at supporting families, the Chancellor announced reforms to the High Income Child Benefit Charge (HICBC). From April 2024, the HICBC threshold will increase to £60,000, with the rate at which it is charged halved. This means that child benefit will not be fully withdrawn until individuals have an income of at least £80,000. Furthermore, by April 2026, HICBC will apply on a household basis rather than an individual one, ensuring a fairer distribution of benefits among families.

Introduction of Additional UK Individual Savings Account (ISA)

To encourage saving and investment, the Chancellor revealed plans to introduce an additional UK Individual Savings Account (ISA). This new ISA will come with a £5,000 allowance, complementing the existing £20,000 ISA limit. By providing individuals with more opportunities to save tax-free, this measure aims to promote financial security and wealth accumulation among the population.

Reduction in Higher Rate of Capital Gains Tax (CGT)

In a bid to stimulate the property market, the Chancellor announced a reduction in the higher rate of Capital Gains Tax (CGT) for residential property disposals. Effective from 6th April 2024, the rate will be lowered from 28% to 24%, providing property owners with increased incentives for investment and disposal.

Abolition of Furnished Holiday Lettings Tax Regime

From 6th April 2025, the Furnished Holiday Lettings tax regime will be abolished. This move aims to simplify the tax system and remove complexities associated with the taxation of holiday let properties, providing clarity and transparency for property owners and investors.

Adjustment of Value Added Tax (VAT) Thresholds

The Chancellor announced adjustments to the Value Added Tax (VAT) registration thresholds, with the threshold rising from £85,000 to £90,000 from 1st April 2024. Additionally, the deregistration threshold will increase from £83,000 to £88,000. These changes aim to alleviate the administrative burden on small businesses and provide them with greater flexibility in managing their VAT obligations.

Replacement of Non-UK Domicile Rules

In a significant reform, the Chancellor announced the replacement of the non-UK domicile rules with a regime based on residence, effective from 6th April 2025. This overhaul aims to simplify the tax system for non-UK domiciled individuals, providing clarity and certainty regarding their tax obligations.

The Spring Budget 2024 unveiled by the Chancellor brings forth a series of measures aimed at stimulating economic growth, supporting families, and simplifying the tax system. With reductions in National Insurance Contributions, reforms to the High Income Child Benefit Charge, and adjustments to various tax thresholds, the government seeks to create a more conducive environment for individuals and businesses to thrive. As these policies come into effect, their impact on the economy and society at large will become increasingly apparent, shaping the landscape of the UK’s fiscal future.