Chancellor Jeremy Hunt stood at lunchtime today and delivered his last Budget speech before the hotly anticipated 2024 Parliamentary election, in what was likely the noisiest and most disrupted Budget session that we’ve seen in the last twenty years.
While the Budget contained plentiful investment announcements, forward planning, and promises of reforms, consultations and simplifications, it was arguably a political Budget among which these headlines were noted:
- A reduction of the 11% inflation rate in October 2022 to the current rate of 4%, with the OBR predicting inflation will sit at 2% in “just a few months’ time”.
- The OBR expects the UK economy to grow by 0.8% this year and 1.9% next year.
- The 2019 Levelling Up Fund saw:
- £100m funding to areas including High Peak, Dundee, Conwy, Erewash, Redditch, Coventry and Bingley
- Over the next decade, £20m to 20 new places, including Darlington, Peterhead, Runcorn, Harlow, Eastbourne, Arbroath and Rhyl, for community regeneration
- £188m to support projects in Sheffield, Blackpool and Liverpool
- £242m of investments in Barking Riverside and Canary Wharf to create some 8,000 houses and transform Canary Wharf into a new hub for life science companies
- A landmark Public Sector Productivity Plan that restarts public service reform and will change the traditional approach to public spending, kicking off with an investment to modernise NHS IT systems at the cost of £3.4bn to unlock £35bn of savings.
Moving on to those matters most likely to affect and be of interest to our clients…
- Late submission and late payment penalties for VAT and Self-Assessment Income Tax returns will be simplified and now operate under the same regime. Introduced for VAT from January 2023, this will roll out for Self-Assessment income taxpayers on a phased basis from April 2026.
- Interest charged for VAT and Self-Assessment Income Tax will also be simplified and will be charged from the date a payment was due to the date the payment is received.
- Capital Gains Tax (CGT) payable for higher rate taxpayers on the disposal of residential property will decrease from 28% to 24% from 6th April 2024, but the planned reduction in CGT annual exemption from £6,000 to £3,000 will go ahead.
- Multiple Dwellings Relief (MDR) was a form of Stamp Duty Land Tax (SDLT) relief that reduced the overall stamp duty payable when multiple property transactions were connected or part of a series. This will be abolished from 1st June 2024.
- Furnished Holiday Lets (FHL) status will be abolished from April 2025. Investment properties or second homes may qualify as FHLs if they meet certain criteria. If they qualify as an FHL, then they have access to tax reliefs that traditional investment property landlords wouldn’t be able to access. The Chancellor confirmed that FHL status will be abolished from April 2025.
- Further National Insurance reductions. The main rate workers are charged National Insurance will reduce from 10% to 8% from 6th April 2024. This applies to earnings between £12,570 and £50,270. From the Autumn Statement late last year, the main rate the self-employed are charged National Insurance was due to reduce by 1% from 9% to 8% on 6th April 2024, but after today’s Budget, this will now reduce by a further 2% to 6%.
- Child Benefit is key for many families in the UK, and there has been a mismatch where a family with two incomes lower than £50,000 each would qualify for Child Benefit. In contrast, a family with less overall income but one of those incomes being above £50,000 could see their Child Benefit restricted or eliminated altogether. Today’s measures see the lower threshold for Child Benefit from April 2024 increase from £50,000 to £60,000 and the higher threshold increase from £60,000 to £80,000. From April 2026, there will be full reform where Child Benefit qualification thresholds are based on overall household income.
- VAT Registration changes mean that the turnover threshold where businesses must register for VAT will increase by £5,000 from £85,000 to £90,000 from April 2024.
- The non-domiciled tax regime will be abolished and replaced with a fairer system from April 2025, where new arrivals to the UK pay the same tax as all other residents after they’ve been in the UK for four years.
- Fuel Duty remains frozen for another 12 months to February 2025.
- Alcohol Duty also remains frozen until February 2025.
- Vaping products will be subject to a duty to be introduced in October 2026, with a similar increase in Tobacco Duty at the same time.
- Air Passenger Duty on premium cabin flights will increase to account for the rise in inflation. Non-premium flights will not be affected by the increase.
- Landfill Tax Rates for 2025 to 2026. The government will legislate in a future Finance Bill to increase the standard and lower rates of Landfill Tax in line with Retail Price Index (RPI), adjusted to take account for high inflation in the period 2022 to 2024 and rounded up to the nearest 5 pence. The change will take effect on and after 1 April 2025.
- Landfill Communities Fund 2024 to 2025. The government will set the value of the Landfill Communities Fund for 2024 to 2025 at £30.9 million, with the cap on credits claimed by landfill operators in respect of contributions remaining at 5.3% of their Landfill Tax liability.
Despite outlining the above, no changes were announced to Income Tax, savings or Dividend rates for 2024 – 2025, nor the Personal Allowance. Similarly, Corporation Tax rates, allowances and reliefs have not been affected by today’s Budget.
Overall, today’s announcements didn’t herald too many mainstream changes. As always, the devil is in the detail, and as is so often the case on Budget day, the details aren’t yet present.
Notwithstanding today’s statement, it remains to be seen if any of the changes and proposals will stand the course of time if we see a change of government later this year.
To download our Budget summary document in full, click here.
As always, should you have any questions concerning today’s Budget Announcement, do not hesitate to contact your local Champion office.
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