The chancellor gave his last spring budget before the election. It included changes to the tax system that are meant to make it easier to understand, more fair, more in line with changes in the economy, and better able to support public funds.
Again, we need to have a number of talks, and more details will be shared over the next few weeks.
This Guide tells you about the most important changes the Chancellor made in the 2024 Spring Budget.
KEY TAX RATES
| Income tax rates: England, Wales & Northern Ireland (non-dividend income) | 2024/25 | 2023/24 |
| 0% starting rate for savings only | Up to £5,000 | Up to £5,000 |
| 0% on personal allowance (subject to any clawback of PA) | £0 – £12,570 | £0 – £12,570 |
| 20% basic rate tax | £12,571 – £50,270 | £12,571 – £50,270 |
| 40% higher rate tax | £50,271 – £125.140 | £50,271 – £125.140 |
| 45% additional rate tax | Above £125,140 | Above £125,140 |
| Scottish rates of income tax (non-dividend income) | ||
| 0% on personal allowance (subject to any clawback of PA) | £0 – £12,570 | £0 – £12,570 |
| 19% starting rate | £12,571 – £14,876 | £12,571 – £14,732 |
| 20% basic rate tax | £14,877 – £26,561 | £14,733 – £25,688 |
| 21% intermediate rate tax | £26,562 – £43,662 | £25,689 – £43,662 |
| 42% higher rate tax | £43,663 – £75,000 | £43,663 – £125,140 |
| 45% advanced rate | £75,001 – £125,140 | n/a |
| 48% top rate (47% for 2023-24) | Above £125,140 | Above £125,140 |
| National insurance | 2024/25 | 2023/24 |
| Lower earnings limit, primary class 1 (per week) | £123 | £123 |
| Upper earnings limit (UEL), primary class 1 (per week) | £967 | £967 |
| Primary threshold (PT) (per week) | £242 | £242 |
| Secondary threshold (per week) | £175 | £175 |
| Employment allowance (per year/employer) | £5,000 | £5,000 |
| Employee’s primary class 1 rate between PT and UEL From 6 April 2023 to 5 January 2024 From 6 January 2024 to 5 April 2024 | 8% | 12% 10% |
| Employee’s primary class 1 rate above upper earnings limit | 2% | 2% |
| Married woman’s reduced rate between PT and UEL From 6 April 2023 to 5 January 2024 From 6 January 2024 to 5 April 2024 | 1.85% | 5.85% 3.85% |
| Married woman’s rate above upper earnings limit | 2% | 2% |
| Employer’s secondary class 1 rate above secondary threshold | 13.8% | 13.8% |
| Class 2 small profits threshold (per year) | £6,725 | £6,725 |
| Class 2 lower profits threshold (per year) | n/a | 12,570 |
| Class 2 small profit threshold (voluntary- per week) | £3.45 | £3.45 |
| Class 2 rate (per week where profits are above lower profits limit threshold | £0 | £3.45 |
| Class 3 voluntary rate (per week) | £17.45 | £17.45 |
| Class 4 lower profits limit | £12,570 | £12,570 |
| Class 4 upper profits limit | £50,270 | £50,270 |
| Class 4 rate between lower profits limit and upper profits limit | 6% | 9% |
| Class 4 rate above upper profits limit | 2% | 2% |
| Class 1A/1B NIC | 13.8% | 13.8% |
Business
“Full expensing” discount for Assets that are leased
The chancellor said that he wanted to include tax breaks for fully writing off leased assets.
Since businesses will be able to lease assets to boost output by giving owners the newest, cleanest, and most efficient equipment, the relief will help them be more efficient.
There is no set date for when the relief will begin, and it depends on draft law being made public.
UK Tax Credit for Independent Films
The Chancellor talked about the UK Independent Film Tax Credit (IFTC) in the Spring Budget 2024.
Under IFTC, films that qualify can choose to get an enhanced Audio-Visual Expenditure Credit (AVEC) of 53% on their qualified costs.
Productions that are eligible must have begun principal shooting on or after April 1, 2024, and they can only claim costs that happened on or after April 1, 2024.
Starting on April 1, 2025, claims can be sent to HMRC for costs incurred after April 1, 2024, as long as main photography for a movie began after April 1, 2024.
Tax Breaks for Theaters
In the Spring Finance Bill 2024, the government will introduce legislation for permanent 40%/45% (for non-tour/touring and orchestral productions, respectively) headline rates of tax relief for theaters, orchestras, and museums and galleries.
This is in line with what was announced in the Spring Budget 2024. From April 1, 2025, these rates will be in place.
Plan for recovery loans
There will be a fourth version of the Recovery Loan Scheme, which will run until June 2024.
It will be increased and given the name Growth Guarantee Scheme. The scheme’s rules will not change, which will ensure continuity and consistency for lenders and the business community.
It will also offer a 70% guarantee to lenders who participate on loans of up to £2 million given to small companies.
Changes to VAT Threshold
The taxable turnover level that tells you if you need to register for VAT will go up from £85,000 to £90,000. This will happen on April 1, 2024.
The amount of taxable income a person must have in order to ask to be deregistered will go up from £83,000 to £88,000.
The Furnished Holiday Lettings (FHL) system was taken away.
With the end of the FHL tax system, landlords who rent out short-term furnished vacation homes will no longer be able to get a tax break over landlords who rent out residential properties to long-term tenants. From April 2025 on, this will be true.
At the moment, landlords who use the furnished holiday lets system can deduct their full mortgage interest payments from their rental income.
They can also get capital allowances on the furniture, pay less capital gains tax (CGT) when they sell, get CGT rollover relief, and other benefits.
Individuals
Tax on income
The personal tax limits, which include the personal allowance, the basic rate threshold, and the higher rate threshold for income tax, will stay the same until April 2028. They are currently £12,570 and £50,270. From April 6, 2023, the extra rate ceiling went down from £150,000 to £125,140.
Between 2023 and 2024, the personal allowance will be bigger.
A person’s personal budget is taken away at a rate of £1 for every £2 of income above £100,000 per year. At this point, the personal budget is no longer available at all.
People who lose their personal allowance are taxed at 40% on both the extra £2 of income and the £1 of personal allowance that they lost.
This gives us a discount rate of 60%, which stays the same up to £125,140 (£100,000 plus (12,570 x 2)). When you make £125,140, you lose all of your personal income.
National Insurance for everyone
From April 6, 2024, the main rate of basic Class 1 National Insurance contributions will go down by two percentage points, from 10% to 8%. This will be done by passing new laws.
From April 6, 2024, the main rate of Class 4 National Insurance payments for people who are self-employed will go down by two percentage points, from 8% to 6%.
This is on top of the main rate of Class 4 National Insurance payments going down from 9% to 8%, which was already announced.
This means that from April 6, 2024, the main rate will drop from 9% to 6%.
The exemption for capital gains tax has been cut.
As was already said, starting in April 2024, the amount of money that people don’t have to pay in capital gains tax each year will drop from £6,000 to £3,000.
Starting in April 2024, the capital gains tax rate for people who pay a higher rate on the sales of residential homes will go down to 24%.
The new method will be based on residence instead of non-dom status.
From April 6, 2025, the government will get rid of the remittance basis of taxes for people who don’t live in the UK and replace it with a simpler residence-based system.
The government also said they want to change the inheritance tax system so that it is based on where the death occurs.
They plan to print a policy consultation on these changes later this year, followed by draft legislation for a technical legislation.
Child Benefit Charge Level for People with High Incomes
As of the 2024–25 tax year, the government will raise the adjusted net income starting point for the High Income Child Benefit Charge (HICBC) from £30,000 to £60,000 in the Spring Finance Bill 2024.
Part 681C will also be changed to raise the HICBC taper to between £60,000 and £80,000.
If your income is between £60,000 and £80,000, you will pay half as much for HICBC. For every £200 of income above £60,000, you will pay an extra 1%.
The tax people who make more than £80,000 will have to pay will be similar to the full amount of child benefit they get.
New spending limit for British ISAs
The government has said that the UK ISA will be coming out. This will add a new ISA limit of £5,000 to the current annual ISA allowance of £20,000.
It will give people a new way to save money tax-free and invest it in the UK.
This will be put in place after a public hearing that takes place from March 6, 2024, to June 6, 2024.
Others
Stamp Duty Land Tax (SDLT) breaks for various homes will no longer be available.
From June 1, 2024, people in England and Northern Ireland who buy more than one home in the same transaction or in transactions that are related to each other will not be able to get Multiple Dwellings Relief (MDR).
MDR is a Stamp Duty Land Tax (SDLT) relief for large purchases. The amount of money paid for land is usually used to figure out the tax rate. MDR is open to anyone who buys two or more homes in a single transaction or a series of transactions linked together.
It lets the buyer figure out the tax based on the average value of the homes they bought instead of their total value.
More tools for the HMRC
The government is still trying to get people to pay their taxes by investing more in HMRC’s ability to collect tax bills.
The government is building on recent strong actions in the fiscal sphere, such as steps to crack down on people who encourage people to avoid paying taxes.
They are now taking even more steps to protect taxpayers, making it harder for bad people to give bad tax advice that could hurt people.
The government wants to hear your thoughts on two things: ways to make the tax advice market more regulated, and making tax experts register with HMRC if they want to talk to HMRC on behalf of a client.
