Spring Budget 2024 - Summary
Posted on 9th March 2024
The Chancellor delivered his Spring Budget on 6 March 2024. This Budget comes at a time of economic uncertainty and continued political turnmoil and ahead of the upcoming election.
The Chancellor was clear to state that their aims continued to be to ensure that the tax system is simple, fair and keeps pace with economic developments and supports public finances.
He said that this is a Budget for "long-term growth".
Corporation Tax
No changes.
Corporation Tax continues to be calculated at 19%-25% depending on profit levels. Read our blog here for more information.
Capital Allowances
No changes. Although suggestions that they are intending to include "full expensing" (see below) on leased assets. This is still under consultation at this time and there is no timeline for when this may be introduced.
The below key allowances remain:-
Annual Investment Allowances - Annual Investment Allowance was previously confirmed at a permanent rate of £1m from April 2023 and will stay.
‘Full expensing’ deduction - In order to replace super-deduction, a new ‘Full Expensing’ deduction is announced from 1 April 2023 until 31 March 2026. The relief allows companies to claim 100% first-year deduction from profit before tax (50% for special pool rate) on qualifying new main-rate plant and machinery investments. With AIA still available, this won't have a big impact for small businesses despite the big headlines!
Income tax
No changes.
The Personal tax thresholds – ie personal allowance, basic and higher-rate thresholds for income tax – are maintained until April 2028 at a current level of £12,570 and £50,270 and additional rate threshold of £125,140.
National Insurance for self-employed*
*(doesn't include Limited Company Directors)
Class 4 Contributions for self-employed on all earnings between £12,570 and £50,270 were reduced from 9% to 8% in the Autumn Statement and the government are now going further and reducing to 6% from April 2024.
Our thoughts - Great news for sole-traders, but what about Limited Company Directors?! This won't help them.
National Insurance for employees
Class 1 Contributions for employees were reduced from 12% to 10% in the Autumn Statement and the government are now going further and reducing to 8% from April 2024.
This will impact approx 27 million employees - with savings of up to £450 a year.
Our thoughts - Once again, great news for employees, but what about Limited Company Directors?! This won't help them (we've run the numbers on this one!)
Dividend allowance
No changes.
Dividend allowance is £500 (per year) from April 2024.
Dividends are taxed at 8.75% (basic rate), 33.75% (higher rate) and 39.35% (additional rate).
Capital gains tax: reduce the annual exempt amount
No changes.
As previously announced, the annual exemption amount for capital gains tax for individuals will change, from £12,300 to £6,000 from April 2023, then £3,000 from April 2024.
Capital gains tax: on property
The rate of Capital Gains Tax on property sales will reduce from 28% to 24%.
VAT
The VAT registration threshold has been increased from £85,000 to £90,000 turnover.
This is the point at which a business must register for VAT. Important to note that this threshold is not per tax year - it is a rolling 12-month period, so it is important to monitor your turnover.
High Income Child Benefit Charge (HICBC)
The threshold for the High Income Child Benefit Charge, which effectively claws back Child Benefit from higher earners, is increasing from £50,000 to £60,000.
This means that where either partner (husband/wife) earns over £60,000, they will begin to pay back some of the Child Benefit they have received.
The rate at which HICBC is charged has also been reduced - so it will now be calculated as 1% for every £200 of income that exceeds £60,000.
Other Key Tax Points
The non-domicilied tax status, giving non-domiciled individuals an unfair tax advantange has been abolished. This means foreign nationals who live in the UK, but are officially domiciled overseas, will no longer be able to avoid paying UK tax on their overseas income or capital gains.
The furnished holiday lettings (FHL) regime has been abolished.
Summary
Unfortunately, although some good headline grabbers, very little to support limited company directors. The key one that may make a difference and give you back some pennies, is the HICBC changes.
If you have any questions on how the Budget impacts you, please get in touch!
Written by:
Nicola J Sorrell - Effective Accounting
Founder | Xero Champion | IR35 Expert
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