The Chancellor on the Hunt for quick wins?

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The Chancellor on the Hunt for quick wins?

In what is likely to be his final Budget before the 2024 general election, the Chancellor utilised one of the last opportunities to make major changes to taxation.

There were a number of updates announced that build on measures outlined in last November’s Autumn Statement, with changes impacting families, workers, property owners and investors alike.

Here we have summarised how this may impact you and your family.

Working for parents?

Last year’s Budget announced a significant expansion of childcare support in England by providing 30 hours a week of free childcare to eligible working parents. This year’s Spring Budget announced plans to address the concerns of families already caught by the High Income Child Benefit Charge (HICBC), increasing the threshold to £60,000 by April 2026. This will be assessed on a household rather than individual basis, which means more families may be subject to the charge.

A win for workers

Following on from last year’s Autumn Statement, the Chancellor announced in this Budget a further 2% reduction in the employee national insurance (NI) rate from 10% to 12%, resulting in a saving of £450 a year for the average employee. The Government is also cutting taxes for the self-employed from 6th April 2024 by reducing the main rate of Class 4 self-employed NICs from 8% to 6%.

Further assistance is being offered to the self-employed with the VAT registration threshold being increased from £85,000 to £90,000 starting in April of this year.

Giving with one hand to property owners, taking with the other

Individuals planning to dispose of residential property will see a reduction in the higher rate of Capital Gains Tax (CGT). From 6th April 2024, any gains falling into the higher rate band will see tax cut from 28% to 24%. There is no change to the basic rate of 18%. As the sale of an individual’s home will normally be exempt from CGT, this change will be of most interest to owners of multiple properties who may wish to delay a disposal until the new tax year.

Property owners who qualify for the Furnished Holiday Lettings (FHL) tax regime will see the loss of several attractive tax benefits, such as profits counting as earnings for pension purposes. However, the Government intends to remove the tax incentives for landlords who prioritise short term holiday lets over longer term tenants. The regime will be abolished from 6th April 2025.

This may mean that many FHL landlords could either just stop letting their properties and keep them as second homes, or sell up and move the proceeds into another form of investment.

Backing Britain

The Government will consult on the introduction of a new UK Individual Savings Account (ISA) with a £5,000 allowance, it will also seek views on how to design and implement it.  This will be in addition to the existing ISA allowance of £20,000. The main objective for the UK ISA is to support a culture of investment in the UK.

The FTSE 250 jumping 1% on the announcement demonstrates that a British ISA allowance could direct much needed capital into UK listed equities. This follows consistent outflows since Brexit.

Scrapping non-dom tax status

The non-domicile tax regime that applies to people working and living in the UK, but are not currently domiciled, will be abolished. A simplified regime using a residency-based system will be introduced from April 2025. Individuals will not pay any UK tax on foreign income and gains for their first 4 years of UK residency, provided they have been non-tax resident for the last 10 years. After the initial four years, they will begin paying the same taxes as all UK residents. For those already part of the non-dom regime, transitional arrangements will be put in place.

If you feel this summary would be useful to any friends or family, please do share it accordingly.

Please be aware that as with all investments, your capital is at risk, you may not receive back the same amount that you invest, and past performance is not an indication of future performance. Tax treatment depends on individual circumstances and may be subject to change.

If you have any questions about this article, or wish to discuss your financial circumstances, please do not hesitate to contact Relationship Manager, Phil Sole and House & Community Coordinator, Emma Walker.

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