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spring budget 2024 affects

The Spring Budget 2024 contained no flash surprises or big wins, particularly from a business perspective. Whilst there were a few golden nuggets here and there, for individuals especially, these ‘giveaways’ are really being overshadowed by the ever-increasing external pressures on businesses and the effect this will continue to have on growth, the economy, and resultant cost of living. 

Key headlines from the Spring Budget 2024 included: 

  • A further 2p cut to National Insurance contributions, effective from April. 
  • Abolishment of the Non-UK Domicile tax status from April 2025. 
  • A rise to the VAT registration threshold from £86,000 to £90,000 – where it will remain frozen until April 2026.
  • Income threshold for Child Benefit raised to £60,000 from April 2024, with a commitment to consult on the change to a household system by April 2026.
  • The higher capital gains tax rate for residential properties lowered from 28% to 24%. 

Whilst we’ve already highlighted the immediate effects of the 2024 Spring Budget here’s a closer look at some of these key changes, and how they affect you and your business. Director at Foxley Kingham, Crystal Boston, has also offered some key insight into how to plan and adapt to make the most of these fiscal changes.

Key changes affecting businesses 

Whilst there weren’t too many announcements that will directly affect businesses across the board, there were a few that businesses of all sizes have to pay attention to.

Rise to VAT Registration Threshold

The raised VAT registration threshold to £90,000 might be food for thought for some, the first increase since its initial freeze in 2017. Combined with the deregistration threshold increasing to £88,000,  HMRC estimates this change will benefit over 28,000 businesses which will no longer have to be VAT-registered. 

national minimum wage and national living wage foxley kingham accountants

National Minimum Wage and National Living Wage increases

Whilst it’s good news that the Government has decided to increase both the National Minimum Wage and the National Living Wage, this will have a sizeable impact on businesses. Whilst the National Living Wage will rise from £10.42 to £11.44, those qualifying for it will now include 21 and 22-year-olds, with the National Minimum Wage increasing for 18 – 20-year-olds (£8.60), under 18s (£6.40) and apprentices (£6.40). 

For businesses with employment bills, due consideration will need to be given to these changes – and quick. These new rates come into effect on 1st April 2024. 

The abolished Furnished Holiday Lettings Tax Regime

For those who are in the business of furnished holiday lettings, the scrapping of this tax regime will bring these ventures in line with longer-term rents, from a tax perspective – However, for those with larger portfolios of mixed long-term rentals with holiday lets, the two income streams will no longer need to be reported separately. Whilst the legislation on this is yet to be clarified (effective from April 2025) we’re expecting the extra allowances available through the Furnished Holiday Lettings Tax Regime to be scrapped, which is not what professional holiday letting businesses will want to hear. 

Whilst it’s still a year away – you need to be planning now.

Crystal commented on these changes:

“Generally speaking, there isn’t too much in this latest budget that’s directly designed for business, but looking at it holistically there are some wins in there, so it’s worth having an open conversation with your Accountant to make sure you’re aware of any benefits you’re missing. 

For limited companies, the biggest opportunity is the rise in the Annual Pension Allowance, which has risen from £40,000 to £60,000 alongside the scrapping of the Lifetime Allowance charge. 

For sole traders and partnerships, the removal of class 2 national insurance contributions and the cut to class 4 contributions (from 9% to 6%) will bring about a nice saving for the self-employed and combined with a further reduction of the dividend allowance effective from April, means that some businesses may want to assess whether it’s still financially beneficial to remain a limited company.

Whilst not breaking news, the Budget also reaffirmed that Making Tax Digital will indeed be implemented from April 2026 – so for partnerships and sole traders, it might be worth getting to grips with this sooner rather than later.” 

And for individuals 

Whilst we’re sure it has nothing to do with the fact that a General Election is on the cards, this Budget contained some, perhaps, superficially positive announcements for individuals. For example, freezing Income Tax bands is all very well, although with the cost of living still exponentially higher than the previous decade, it doesn’t feel like much of a gift. As well as this, there are some opportunities and a few upcoming changes to be considered. 

high income child benefit

High income Child Benefit threshold raised

Raising the Child Benefit income threshold from £50,000 to £60,000 will be music to the ears of many. And will allow families and family-managed businesses more scope for tax planning. 

The government have also announced that pending consultation, their plan is to change the income threshold to a household-based system from April 2026 – which could also require planning for families, depending on their circumstances. 

Abolishing the ‘non-dom’ tax status

Beginning in April 2025, non-UK domiciles will move to a new tax regime where they won’t pay tax on foreign income for four years. Thereafter paying the same taxes as UK residents. Existing non-doms residing in the UK will be given a two-year transition period. 

Another element of this which will be clarified in the coming year, is a change to Inheritance Tax (IHT) for non-UK domiciles. Whilst it’s currently a domicile-based system, the government has suggested that it intends to change that to a residence-based system which would mean that certain non-UK assets could be within the scope of IHT, depending on the length of time as resident of the UK. 

None of these changes to IHT will come into effect this parliamentary term, but a consultation is planned before any changes are made. 

capital gains tax

Capital Gains tax rate lowered for residential properties 

A welcome announcement for those who are looking to sell their home (especially those who bought some time ago) is the drop of Capital Gains tax for residential properties, from 28% to 24%. To put it simply – this could provide some with a substantial saving. 

Crystal commented: 

“Alongside a few ‘headline’ announcements like the change to child benefit income threshold, this Budget contains a fair amount of adjustments to various rates, allowances, and thresholds creating a cocktail of complexity when it comes to tax-planning for families, individuals, and business owners alike. 

As well as imminent changes for April this year, the Budget has given us a flavour of changes to come in the next few years, so the best thing to do is to get in touch with your Accountant. Planning now for 2025, 2026 and beyond can truly make a difference when it comes to maximising the few benefits on offer here, so make it a priority to get started.”

Your Foxley Kingham account manager can help if any of the announced changes raise queries or give you reason for concern. If you’re not an existing client of Foxley Kingham, we also offer free initial consultations. If this is of interest, get in touch here.