There has been much speculation surrounding the Spring Budget, with many eagerly anticipating updates on pension reforms, tax cuts and allowances. Below we will break down the main topics in the announcement and how they might affect you going forward.

Tax Allowances

The subject on everyone’s lips is taxes. Jeremy Hunt announced the following changes:

• Capital Gains Tax (CGT) a reduction of higher rate CGT from 28% to 24% for the disposal of residential property. This change aims to encourage more property sales and increase revenue.

• The furnished Holiday Lettings Regime will be abolished from April 2025 citing a negative impact on local communities by reducing the number of properties available for long-term renters.

As expected there was no mention of increasing personal tax allowances that have been frozen since the 2021/22 tax year. However, this comes as no shock as it was mentioned back in the Autumn Statement 2023 that these would remain frozen until 2027/28. Although, the Chancellor did announce a further cut to National Insurance Contributions.

National Insurance Contributions

In the Autumn Statement 2023, Jeremy Hunt announced cuts to NICs. Employee NICs were 12% at the time and were reduced to 10%, with self-employed NICs being cut from 10% to 8%.

From the 6th April 2024 employee NICs have been reduced from 10% to 8% and self-employed NICs have been reduced from 8% to 6%. These cuts should save the average employee £450 a year, with a maximum saving of £754 for the highest earners.

High Income Child Benefit Charge (HICBC)

The chancellor announced HICBC reforms as the current system is unfair to single-income households that earn over £50,000 a year.

HICBC currently only takes into account the highest earner in a home, meaning that households with two incomes can bring home £49,999 each, per year and not be subject to pay HICBC whereas a single household earner will be subject to the HICBC if they earn £50,000+ per year.

New reforms will take into account household earnings instead of the highest earner’s income, but this will not come into effect until 2026.

For now, though, the Chancellor announced a small victory for single income households, with the threshold being raised from £50,000 to £60,000 and the top taper increased to £80,000, before all child benefit has to be paid back. This means around 170,000 families will no longer be expected to pay the HICBC.

British ISA

A new ISA has been announced – the British ISA which allows £5,000 annual investments with all the tax advantages of other ISAs, on top of existing ISA allowances. This is aimed to encourage individuals to invest in UK assets.

Disclaimer

Tax treatment varies according to individual circumstances and is subject to change.

The Financial Conduct Authority does not regulate tax advice.

If you would like further guidance on any of the announcements made in the Spring Budget please give us a call on 01733 355120 or fill in the contact form.