Personal Taxes
Tax
No changes were announced to the current tax rates and allowance.
| Band | Taxable income | Tax rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 to £50,270 | 20% |
| Higher rate | £50,271 to £125,140 | 40% |
| Additional rate | over £125,140 | 45% |
Personal allowances are reduced by £1 for every £2 your taxable income is over £100,000.
National Insurance
For the employed, Class 1 NIC’s apply from an annual lower threshold of £12,570 to an annual higher threshold of £50,270 – currently at a rate of 10% (reduced from 12% with effect from 6 January this year). For those earning above this level, the rate remains at 2% on all additional earnings.
From 6 April 2024 the main rate will drop a further 2% to 8%, which will generate a maximum saving of £63 per month thereafter (£754 per tax year).
Employers also pay NIC’s, currently at a rate of 13.8% over the lower threshold, but no changes have been announced so this rate will remain.
For the self-employed, Class 4 NIC applies from an annual lower threshold of £12,570 to an annual higher threshold of £50,270 – currently at a rate of 9%. This rate was due to reduce to 8% with effect from 6 April 2024 this year. For those earning above this level, the rate remains at 2% on all additional profits.
From 6 April 2024, the rate will drop a further 2% to 6%. If you are already paying Class 4 NIC, this represents a tax saving of £20 for every £1,000 of profit in the main Class 4 NIC band, up to a maximum of £754 per year. The government has already abolished Class 2 NIC from 6 April 2024.
It is estimated that the 2p cut to national insurance would be worth about £450 a year for someone on a £35,000 full-time salary.
High Income Child Benefit Charge
Parents will receive Child Benefit at the following rates from April 2024: £25.60 a week (£1,331 a year) for the eldest child and £16.95 a week (£881 a year) for additional children.
Currently, if either partner’s income is over £50,000, then the High Income Child Benefit Charge (HICBC) applies to claw back the Child Benefit, such that it is fully re-payable once your income is over £60,000. You are required to complete a self-assessment tax return to pay this charge.
From 6 April 2024 the threshold will increase to £60,000 with an extended taper so that the Child Benefit will be fully repayable once your income is over £80,000. The Chancellor also announced that the clawback test will be moved to a total “household income” based system from April 2026, but changes to HMRC data gathering are required to facilitate this.
Non-dom tax status
Non-dom tax status will be “abolished” and replaced by a “modern, simpler and fairer” system from April 2025. The status is enjoyed by people who live in the UK but who have certain overseas links – often determined by whether their father was born abroad. The status means they pay UK tax on money earned here, but not on their worldwide income. After four years, those coming to the UK will pay the same tax as other UK residents. The introduction of the four-year regime will include some transitional provisions for existing non-doms.
Property tax
Capital Gains Tax on property disposals.
Residential property sold for a gain is liable to capital gains tax (CGT); unless it is the sale of your main residence, which is exempt from CGT. Where a property is not exempt then the gain will be taxable in full. If the property was not always your only main residence, then a portion of the gain will be taxable.
Currently, residential property gains are taxed at 18% for gains that fall within the basic rate band and 28% thereafter. The Chancellor announced today the higher rate will be reduced to 24% for property sales that exchange on or after 6 April 2024.
The 60-day reporting requirement runs from completion, so it will be important to be aware that property returns being submitted from 6 April 2024 may still be required to use the 28% rate if the sale exchanged on or before 5 April 2024.
Landlords impacted by the Chancellor abolishing the Furnished Holiday Lets preferential tax regime from April 2025 who choose to sell their property after 6 April 2024 will benefit from the lower rate.
Furnished Holiday Lettings
For many years, the furnished holiday lettings regime has treated the provision of qualifying residential accommodation by way of short-term lettings as a deemed trade for certain tax purposes and, as a result, such businesses have been a common feature of seaside towns.
It was announced in the Budget that this regime will be abolished from 6 April 2025. This will mean that furnished holiday lettings will be treated as property investment businesses from 6 April 2025, with the result that the following tax benefits of being treated as a trade will be lost:
Interest incurred on loans for the purpose of a furnished holiday letting business are currently treated as a deduction from rental income in calculating taxable profits of the business. From 6 April 2025, interest for businesses operated by individuals will cease to be a deduction and relief will instead be given as a 20% tax credit from the individual’s tax liability. For higher rate taxpayers, this will mean a reduction in tax relief for interest to the 20% rate.
As trading assets, capital gains on the disposal of furnished holiday letting assets by individuals currently may qualify for business asset disposal relief: where they qualify, gains up to the lifetime limit of £1m would be taxed at a rate of 10%. As investment assets, from 6 April 2025 such gains will be subject to the CGT tax rate of 18% for profits within the standard rate band or 24% for profits within the higher rate band.
Gains on the disposal of a furnished holiday let would currently qualify for CGT rollover relief such that, if a replacement qualifying asset is purchased, a claim can be made to deduct the capital gain from the tax base cost of the new asset, thereby deferring the tax point of the gain. Such relief is only available for investment properties in cases of compulsory purchase.
Expenditure on qualifying assets for a furnished holiday letting business are currently eligible for capital allowances. As a letting of residential investment property, such relief will be withdrawn from 6 April 2025 although it is likely that such businesses may instead be able to claim a deduction from profits for the cost of replacing domestic items.
Tax relief for pension contributions by individuals is currently limited to contributions of the higher of £3,600 or 100% of net relevant earnings. Currently, profits from furnished holiday lettings are treated as relevant earnings. From 6 April 2025, therefore, those individuals who rely on profits of a furnished holiday lettings business to support obtaining tax relief for their pension contributions may need to seek appropriate advice.
Investments
UK ISA
The government has published a consultation on a new UK ISA with its own £5,000 allowance. This is in addition to the current allowance of £20,000, which applies across cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs (subject to its own £4,000 limit). The consultation runs until 6 June 2024 and is looking for responses on how to define the investments that could be included in an UK ISA.
ISAs offer a tax-free saving opportunity, so for those who already utilise the £20,000 annual allowance this may offer a further opportunity for tax-free savings. With tax thresholds and personal allowances frozen, this may be particularly relevant to some higher earners.
NS&I British saving bond
From early April 2024, NS&I will launch a British saving bond. This will offer investors a guaranteed interest rate fixed for three years on investments between £500 and £1 million. Like all savings from NS&I, money invested will be backed by HM Treasury.
NatWest sale
The Government intends to sell part of its shareholding in NatWest, directly to individual investors. This forms part of the Government’s plan to fully sell its shares by 2025/26. The sale could take place this summer, subject to market conditions.
Corporate Taxes
Full Expensing and Leasing
The government confirmed that full expensing, a 100% first year capital allowance for expenditure on main pool plant and machinery, and a 50% first year capital allowance for special rate allowances, would be made permanent for companies subject to corporation tax. It was also announced that a working group would be formed to consider the extension of full expensing to assets for leasing where the lessor is treated as the owner of the asset for capital allowances purposes.
Indirect Taxes
VAT Registration Threshold
To ease the burden on small businesses, the government has announced that, for the first time in seven years, it will increase the VAT registration threshold. The threshold goes from £85,000 to £90,000, and the deregistration threshold from £83,000 to £88,000. These changes will apply from 1 April 2024.
DIY builders scheme – power to request evidence
HMRC plans to further amend the DIY builders scheme, which allows those building their own home to claim a VAT credit on building materials. The scheme was digitised in 2023, and a requirement to submit invoices with a claim removed.
The amendment, to take effect from the date of Royal Assent to the Spring Finance Bill 2024, introduces a new power in primary legislation to underpin existing operational practice. This will allow HMRC to request further evidential documentation, including invoices, in order to validate a DIY claim.
Alcohol Duty freeze
The government has announced an extension by a further 6 months to the six-month freeze on alcohol duty, until 1 February 2025.
Fuel duty changes
The government has announced that it is freezing fuel duty rates for 2024-25. The temporary 5p cut in fuel duty rates will be extended until March 2025. The government has also announced that, following review, it will maintain the difference between road fuel gas and diesel duty rates until 2032.
Vaping Products Duty – new levy proposed
The government has announced a consultation into a proposed new levy on vaping products from 1 October 2026. The consultation implies that such a levy will apply at the import or UK manufacturing stage. This is similar to the regime announced for the planned Deposit Return Scheme and there would be processes to ensure credits and drawbacks of duty would apply. The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco at the same time.
Air Passenger duty (APD) rate changes
The government announced that it will make a one-off adjustment air passenger duty (APD) on non-economy flights. APD on premium economy and business class flights will be hiked by more than 10% next year. It will add £66 in tax to a London-New York flight in business class, up to £647, from April 2025. APD on a premium economy seat will rise £22 to £216 on a transatlantic flight, or from £26 to £28 on a short-haul flight.
Other Taxes
Stamp Duty Land Tax
Multiple Dwellings Relief
Multiple Dwellings Relief (MDR) – the bulk purchase relief for residential property – will be abolished for purchases with an effective date (normally completion) on or after 1 June 2024. However, purchases where contracts were exchanged on or before 6 March 2024 will continue to benefit from MDR, regardless of when they complete.
Under MDR, the rate of SDLT has been determined by the total consideration given by any purchaser buying two or more dwellings in a single transaction, or linked transactions, divided by the number of dwellings. This has allowed the purchaser to calculate the SDLT based on the average value of the dwellings purchased multiplied by the number of dwellings, as opposed to their aggregate value.
Its abolition follows large numbers of speculative claims, for example in relation to ‘granny flats’, but will result in significant increases in SDLT liability, particularly for purchasers of properties such as blocks of flats.
Mixed use properties
Despite many speculative claims being made by purchasers, the government has decided not to amend the SDLT legislation on purchases of mixed residential/commercial properties, which will continue to be liable to SDLT at commercial rates.
Registered Social Landlords
The definitions relating to relief from SDLT for Registered Social Landlords providing social housing will be amended with effect from 6 March 2024, to ensure that they apply to all qualifying purchases with public subsidy. In addition, public bodies will be exempted from the penal 15% rate.
First Time Buyers’ Relief
For purchases with an effective date (normally completion) on or after 6 March 2024 (subject to transitional rules), First Time Buyers’ Relief will be extended to individuals buying leasehold residential property by way of the grant of a new lease through a nominee or bare trustee. This is designed to assist purchasers needing to preserve anonymity for personal reasons.