Spring Budget 2024: Key Highlights for UK Taxpayers

A notable relief comes in the form of reductions to NIC rates. From April 6, 2024, the Class 1 NIC rate for employees will be decreased from 10% to 8%, augmenting a previously announced cut. Similarly, the Class 4 NIC rate for self-employed individuals will see a reduction from 9% to 6%, superseding the initial reduction to 8%. Additionally, the government is set to fully abolish Class 2 NICs, following up on the commitment to relieve self-employed individuals from this charge starting April 2024.

The threshold for the High Income Child Benefit Charge will increase from £50,000 to £60,000 as of April 6, 2024, introducing a tapered charge between £60,000 and £80,000. The government also plans to explore a transition to a household-based assessment system by April 2026.

The current tax regime for non-UK domiciled individuals will be replaced with a new residence-based system effective April 6, 2025. Under this system, individuals resident in the UK for over four years will be subject to UK tax on their global income and gains, with certain transitional reliefs provided.

The Budget also announces a reduction in the higher rate of Capital Gains Tax on residential properties from 28% to 24%, effective from April 6, 2024. The lower rate will remain at 18% for gains within the basic rate band.

The existing tax regime for Furnished Holiday Lettings will be abolished from April 6, 2025, impacting those with income from such properties.

The Budget outlines future requirements for Defined Contribution pension funds to disclose asset allocation breakdowns, aiming to increase transparency and potentially influence the allocation towards UK equities.

In a move to encourage savings, a new UK ISA with a £5,000 allowance and British Savings Bonds through National Savings and Investments are set to launch in April 2024, offering tax-free investment opportunities and guaranteed interest rates, respectively.

The government commits to increasing the hourly rate paid to childcare providers for free childcare hours for children aged nine months to four years, aligning with current economic metrics for the next two years.

New legislation will target the prevention of tax avoidance through the Transfer of Assets Abroad provisions and improve HMRC’s digital services for easier tax payment arrangements. Additionally, from April 1, 2024, estates will no longer require commercial loans to pay inheritance tax before obtaining a “grant on credit” from HMRC.

These changes reflect the government’s initiative to streamline tax processes, reduce tax liabilities, and encourage investment within the UK. For businesses and individuals alike, staying informed on these adjustments will be crucial for effective financial planning in the coming year.