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The 2024 UK Budget: Key Points

The 2024 UK Budget was announced on Wednesday, 6th March by Chancellor Jeremy Hunt. It outlines the government’s spending plans, UK tax policies, and economic goals for the coming year as well as introducing changes to existing legislation. In this blog, we will discuss the key points from the 2024 Budget.

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The 2024 UK Budget was announced on Wednesday, 6th March by Chancellor Jeremy Hunt. It outlines the government’s spending plans, UK tax policies, and economic goals for the coming year as well as introducing changes to existing legislation. In this blog, we will discuss the key points from the 2024 Budget, the government’s goals, and how the Budget may impact individuals, small businesses, investors, and property owners.

Key points from the Budget for businesses and individuals

  • Lower National Insurance contributions
  • VAT registration threshold raised
  • Changes in property taxes
  • ISA limits extended for investment in British industry
  • Changes to child benefit threshold

What are the Government's goals?

The government’s goals, as reflected in the Spring Budget, include stimulating economic growth to avoid a recession, provide a welcoming economic environment for businesses and ensuring inflation continues to decrease. With the next general election on the horizon, the government aims to overturn the polling deficit and gain public favour. While in the past we have seen significant changes to the tax burden, income tax in particular, the Government has elected to honour Mr. Sunak’s 2021 commitment to freezing income tax thresholds, meaning there are no changes to tax only National Insurance.

National Insurance Contributions reduced

National Insurance Contributions (NICs) impact both employees and self-employed individuals. Following on from the Autumn Statement in November 2023 that reduced class 1 NICs from 12% to 10% for employees this announcement has further reduced the amount of NICs paid by payroll workers to 8%. This means that across both the announcements there has been a reduction of 4% which is expected to provide the average employee with £900 more take home pay per year.

For the self-employed the rate was already due to fall 1% to 8% from 6 April 2024, but this has been dropped further to 6%. While this 3% drop for the self-employed is less than the 4% for the employed, the Class 2 NIC for sole traders, previously announced last year, will be abolished which will save £180.

Higher VAT threshold

One of the biggest announcements for small businesses and sole traders is an increase in the VAT registration threshold from £85,000 to £90,000. This change is smaller than some experts predicted but still comes as a welcome relief for businesses with growing turnovers.

Businesses that exceed the £90,000 turnover threshold in a 12 month period will have to register with HMRC to pay VAT on any goods or services that they sell. Small start ups or sole traders will need to keep an eye on their turnover to ensure that they register once they exceed this threshold, but will be glad to see this increase as it will allow more breathing room for smaller enterprises.

How does a higher VAT threshold affect me?

If you are a small business owner or sole trader currently under the threshold for VAT this change will mean you have more room to grow your business before needing to register with VAT. Your accountant can advise you on the point at which you will need to register but it is worth periodically checking that your turnover has not exceeded the threshold in a 12 month rolling period.

For those businesses already registered for VAT this higher threshold does not necessarily mean you should deregister if your turnover is less than £90,000 as there are advantages to being VAT registered. Talking to your accountant to understand your specific situation is advised and they can help guide you through the legislation you need to comply with as well as offering you advice on when to register and which VAT scheme is best for you.

ISA changes

The 2024 UK Budget brings significant changes to Individual Savings Accounts (ISAs), impacting saving and investment strategies for individuals. following on from Mr Hunt’s announcement, savers will be able to invest a further £5,000 into UK businesses completely tax free. This is in addition to the current limit of £20,000 per year that individuals can save without paying tax.

These changes aim to provide tax reliefs and incentives to save, which can greatly benefit investors. Understanding the new rules surrounding ISAs and their potential advantages will help you ensure that you are saving your money in the best way possible and making the most of your tax free allowances.

What This Means for SMEs and Investors

The changes in the ISA rules can have substantial implications for SMEs and investors. These new rules may offer additional tax advantages, creating new investment opportunities and encouraging greater participation in the market. Investors and savers stand to benefit from the increased tax benefit afforded by the new “British ISA” while businesses in the UK can enjoy an increase in investment.

Child benefit threshold increased

The 2024 UK Budget includes an increase in the child benefit threshold, known as the High Income Child Benefit Charge, which impacts many families’ finances. This change aims to provide additional financial support to households with children. The income threshold at which the benefit is tapered will rise from £50,000 to £60,000, and the top of the taper where it is withdrawn is raised to £80,000. Families that qualify for child tax benefit may see more money in their pocket as a result.

Increasing the child benefit threshold can benefit families across income brackets, ensuring that essential financial assistance reaches those who need it most. Understanding the child benefit threshold and its implications can be complex, particularly if having to file through self assessments. If you are in need of help with understanding the implications of this change then please get in touch with one of out tax experts at Sherwin Currid.

Changes to Property Tax

Properties are another area touched upon in the Budget this year. These changes include reforms in stamp duty, changes to tax legislation for holiday lets and a reduction in property capital gains tax. It is important for property owners to stay informed about these changes and understand how they may impact them, such as rental property profits or property transactions. Consulting with tax professionals can provide guidance on navigating property taxes, at Sherwin Currid our expert accountants can take care of the tax compliance necessary for landlords and property investors.

Abolition of tax breaks for holiday lets

The chancellor says he will scrap tax breaks which make it more profitable for second home owners to let out their properties to holiday makers rather than to long-term tenants to rent.

This change aims to promote a more equitable property tax system and incentivise landlords to let properties to long term tenants rather than short term lets. If you currently own a holiday let you should speak to your accountant to find out how these changes will affect you.

Reduction in property capital gains tax

The higher rate of capital gains tax charged on properties will also be cut from 28% to 24% in a move that Mr. Hunt claims will increase Treasury revenues due to an increased volume of trade on the property market due to the lower tax rates. Property investors should seek professional advice to understand how the reduction in property capital gains tax will impact their specific situations.

For help with understanding your tax obligations and what the recent changes mean for you please get in touch with us.