Spring 2024 Budget

Mr Hunt delivered what will probably be the last Budget Statement of the current parliament. Speculation in the final run up focused on the trade-offs that might be required around cutting taxes and meeting both fiscal rules and spending commitments.

Ultimately, the Chancellor had it both ways, with some headline grabbing measures aimed at easing the tax burden on earners and families, while also introducing some tax increases to cover their costs – in part at least.

With inflation continuing to fall but the UK now in recession, the Chancellor relied on a slight improvement in the OBR forecasts to give him enough room for a headline-grabbing 2% reduction in National Insurance contributions for both employees and the self-employed.  How this will be paid for – in particular, which departments will need to cut public spending again next year – has been left open.  He hopes that by concentrating the giveaways on the active workforce rather than taxpayers generally, economic recovery will be achieved faster.  Other measures to this effect include:

• A further freeze in fuel duties (and those on alcohol)
• The top rate of capital gains tax on residential properties reduces from 28% to 24%.
• The VAT registration threshold increases to £90,000, the first increase since 2017.

Income tax was barely mentioned. The existing rates and thresholds are maintained for 2024/25 and this means that despite the NIC cuts, overall taxation will be at its highest since 1948.  However, the income tax clawback of Child Benefit will now start at £60,000 rather than £50,000.

Many important changes covered in the Budget speech will not be introduced in this parliament – or perhaps at all, depending on who is in charge of the Treasury in the next parliament:

• The Furnished Holiday Lettings regime will be abolished from 6 April 2025
• The ‘full expensing’ treatment for capital expenditure by companies may finally be extended to plant and machinery for leasing.
• The special tax treatment of foreign income and gains of ‘non-domiciled’ UK residents is to be abolished, and replaced by one based on residence, but with the first four years of residence still tax-free.  This will affect fewer than 70,000 people but is forecast to raise up to £2.7 billion per year.  Details are still vague, particularly as regards the effect on inheritance tax, but the earliest any changes would take effect is 1 April 2025.

Please get in touch with the Buckle Barton team if you wish to discuss any aspect in more detail, we’d love to hear from you. You can also read our Buckle Barton Chartered Accountants Budget Summary 2024.