The Spring Budget was announced on 6th March 2024. Here’s some highlights that we think are pertinent to business, individuals and, most importantly, our clients.
For Businesses
VAT
The VAT registration threshold is changing. This threshold is the amount of vatable revenue a company – both incorporated and unincorporated – can make before it mandatorily needs to register for VAT.
By incorporated and unincorporated, this means both limited companies and companies that operate as sole traders or partnerships.
From April 2024 the threshold will increase from £85,000, which it currently is, to £90,000.
The deregistration threshold, the amount of revenue a company’s revenue can drop to until it can deregister for VAT and no longer charge it, has also risen accordingly. This threshold has gone from £83,000 to £88,000.
Alcohol Duty
Alcohol duty was frozen in the Autumn Budget until August 2024. This freeze has now been extended until February 2025.
It’s believed this freeze will help circa 38,000 pubs in the UK, and their drinkers, amidst the cost of living crisis.
Vape and Tobacco
It was announced that a new tax would be imposed on vaping products from October 2026. This new tax will be based on the nicotine levels within vaping products.
The tobacco duty increases alongside the vaping tax introduced. This will add £2 to the cost of 100 cigarettes, and is designed so vaping remains cheaper.
Fuel
One that affects both businesses and individuals – the fuel duty.
The fuel duty will remain frozen, and the temporary 5p a litre cut will continue for another 12 months.
It’s estimated that this freeze will save circa £5bn at the pump for those filling up. Taxation does account for more of than half of what is paid at the pump still though.
Green Initiatives
It was announced that £120m of investment will go into green energy products, which include the expansion of low carbon manufacturing supply chains in the UK. This is in line with the government’s overall green/carbon reduction goals.
Car Benefit in Kind
The car benefit in kind percentages will change, but not until April 2025 in most cases.
For cars with CO2 emissions of <50g/km to 159g/km there will be a 1% rise in April 2025, and this rate will continue to rise by 1% each year until 2027/28 tax year.
Cars with CO2 emissions >160g/km will see no change, with the benefit in kind percentage remaining at 37%.
And, finally, for fully electric cars, which currently benefit from a 2% BIK charge – this will remain at 2% until April 2025. The percentage will then increase by 1% each year until 2028 and the rate will be 5%.
As an example, this means the BIK on an electric car costing £60,000, will be as follows:
|
Tax Year |
BIK Percentage |
BIK Charge |
|
2023/24 |
2% |
£1,200 |
|
2024/25 |
2% |
£1,200 |
|
2025/26 |
3% |
£1,800 |
|
2026/27 |
4% |
£2,400 |
|
2027/28 |
5% |
£3,000 |
Corporation Tax
Rates for corporation tax remain unchanged, with the main rate being 25% and the small profits rate, for companies with profit of less than £50,000, being 19%.
Marginal relief for those companies with profits between £50,000 and £250,000 remains.
For Employers
Minimum Wage
As announced in the Autumn Budget, minimum wage increases across the board.
The age ranges change too, with the 21-22 year old and then 23 years old plus age ranges being abolished and replaced with a 21 years old plus range introduced.
This means minimum wage from April 2024 will change as below:
|
|
2023/24 |
2024/25 |
|
Apprentice Rate |
£5.28 |
£6.40 |
|
16-17 Year Old Rate |
£5.28 |
£6.40 |
|
18-23 Year Old Rate |
£7.49 |
£8.60 |
|
21-22 Year Old Rate |
£10.18 |
£11.44 |
|
23+ |
£10.42 |
£11.44 |
Employers National Insurance
A lot of changes to national insurance were announced in the Spring Budget. It’s important to note, however, that there are no changes to Employers National Insurance.
The only changes relate to employees and the self employed.
This means the rates and limits for Employers National Insurance remain the same in 2024/25, with the amount an employee can earn before the employer must pay national insurance on their salary being £9,100, which is £758 per month or £175 per week.
The Employers National Insurance rate remains at 13.8%, and the Employers Allowance remains at £5,000 for those eligible.
To be eligible for Employers Allowance, which makes the first £5,000 of Employers National Insurance, essentially, free there must be more than just one director on the payroll. The total Employers National Insurance bill in 2023/24 must be less than £100,000 as well.
For Individuals
High Income Child Benefit Charge
A big change to High Income Child Benefit Charge (HICBC) has been announced.
At present, if you earn more than £50,000 and claim child benefit, you must file a self assessment to repay some of that child benefit claimed. Once your salary exceeds £60,000, you must repay the entire amount, meaning it’s not worth claiming it.
From April 2024 the limit for HICBC rises to £60,000, in a move designed to support parents.
The rate of repayment of child benefit is also halved, meaning that it’s repayable at a rate of 1% for every £200 over £60,000. Therefore, you can still claim child benefit up to £80,000 of income.
Over £80,000 means you have to pay the entire amount back, and it’s not worth claiming.
If your salary is between £60,000 and £80,000 and you’re not claiming child benefit, you will be able to from April.
National Insurance
Further changes to National Insurance were announced in the Budget.
Class 1 National Insurance, that employees pay on their wages, will decrease. In 2023/24 tax year employees paid 12% national insurance on their salary over £12,570.
From 2024/25 tax year employees will pay 8% national insurance on their salary over £12,570, which is a further reduction from the original 10% announced in the Autumn Budget.
This means, as an example, if you’re salary is £30,000 you’ll go from paying £2,091.60 to £1,394.40.
There are changes to National Insurance for the self employed as well.
Class 2 National Insurance was abolished in the Autumn Budget. This is the set amount per week that the self employed paid for each week of the tax year that they were self employed. In 2023/24 this was £3.45, so £179.40.
You will still be able to voluntarily pay Class 2 National Insurance if you wish, which helps with state benefits you may receive in the future.
Class 4 National Insurance, which is paid on profits earned over £12,570, will decrease from 9% in 2023/24 to 6% in 2024/25.
This means, if you’re profits were £30,000, as an example, the amount of national insurance you’d pay would go from £1,568.70 to £1,045.80.
Income Tax
The personal allowance and income tax rates remain the same, as do the thresholds for earnings and tax rates.
The dividend allowance, the amount of dividends you can earn tax free, reduces from £1,000 to £500. Dividend tax rates remain the same though.
Furnished Holiday Let Changes
The government have announced changes to the Furnished Holiday Let (FHL) tax rules. Essentially, they’ve been completely scrapped.
The changes will come into effect 6th April 2025, as the government are hoping these changes will see FHL landlords sell their properties before the changes come into effect.
The changes will see furnished holiday let properties subject to the same rules as residential properties, which strips a lot of the tax efficiencies and savings related to FHLs being a business, rather than an investment property.
The current rules will apply throughout 2024/25 tax year, meaning Capital Gains Tax relief is still available throughout the year, and the chargeable rate on sale of such property can be reduced to 10% when specific conditions are met.
Capital Gains Tax on Residential Properties
The Annual Exemption for Capital Gains Tax (CGT) reduces for individuals in 2024/25 tax year, from £6,000 to £3,000.
The higher CGT charged on the gain made from the sale of a residential property will reduce though.
At present, if you sell a residential property that isn’t your main home, you pay tax on the gain at 18% on any amount of the gain falling into your remaining basic rate tax bracket, and 28% on the amount of the gain falling over the basic rate bracket.
From April 2024 the higher rate will reduce from 28% to 24%, which could mean a significant saving for some.
The government are trying to entice landlords into selling their investment properties to free up properties for other people to buy. This is part of this initiative, along with the upcoming changes to the FHL market.
UK ISA
The tax free amount you can save in an ISA in a tax year remains at £20,000.
From April 2024, however, an additional £5,000 allowance will be able to be invested in a UK Savings ISA.
UK Savings ISAs will see the money invested in UK shares or other UK oriented investments, with a view for bettering the economy at home.