Spring Budget 2024

Posted: 7th Mar

Chancellor Jeremy Hunt delivered his ‘Budget for Long Term Growth’ on Wednesday 6 March 2024. Leaving aside any political spin some might want to put on a Budget shortly before an election, there were some notable changes, particularly in relation to child benefit, furnished holiday lets, and national insurance. There was also an increase in the VAT threshold to £90,000 and a cut to Capital Gains Tax on residential property disposals.

Please contact us before taking any action as a result of the contents of this summary.

Personal Tax

Income tax bands and rates

The income tax personal allowance remains at the current level of £12,570.

There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000.
The reduction is £1 for every £2 of income above £100,000. This means that there is no personal
allowance where adjusted net income exceeds £125,140.
The basic rate of tax is 20%. For 2024/25 the band of income taxable at this rate remains at £37,700
so that the threshold at which the 40% band applies remains £50,270 for those who are entitled to the
full personal allowance.
The basic rate band is frozen at £37,700 until April 2028. The National Insurance contributions upper
earnings limit and upper profits limit will remain aligned to the higher rate threshold at £50,270 for
these tax years as well.
For 2024/25, the point at which individuals pay the additional rate of 45% is £125,140.
Different rates and allowances apply to those resident in Scotland.

Tax on savings income

Savings income is income such as bank and building society interest (except ISA deposits).
The Savings Allowance applies to savings income and the available allowance in a tax year depends
on the individual’s marginal rate of income tax. Broadly, individuals taxed at the basic rate of tax have
an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to
additional rate taxpayers. Due to increases in interest rates, we expect that far more people will have
a tax liability on their savings income going forwards.

Tax on Dividends

Currently, the first £1,000 of dividends is chargeable to tax at 0% (the Dividend Allowance). This will
be reduced to £500 for 2024/25.
Dividends received above the allowance are taxed at the following rates for 2024/25:

  • 8.75% for basic rate taxpayers
  • 33.75% for higher rate taxpayers
  • 39.35% for additional rate taxpayers.
    The Corporation Tax due on directors’ overdrawn loan accounts remains at 33.75%.

High income child benefit charge

The High Income Child Benefit Charge (HICBC) is a tax charge that applies to higher earners who
receive Child Benefit, or whose partner receives it.
The government is increasing the income threshold at which HICBC starts to be charged from
£50,000 to £60,000 from April 2024. The rate at which HICBC is charged will be halved from 1% of
the Child Benefit payment for every additional £100 above the threshold to 1% for every £200. This
means that Child Benefit will not be withdrawn in full until individuals have ‘adjusted net income’ of
£80,000 or more.
Those with children, where the higher earner in the household has an income (or drawings) of
between £50,000 and £80,000, and who are not already receiving the benefit should contact the
government to start or restart payments of child benefit from 6 April 2024.
This change to entitlement represents a significant “tax cut” for those with children and an income of
between £50,000 and £80,000.
In addition, the government plans to administer the HICBC on a household rather than individual
basis by April 2026, with a consultation in due course.

National Insurance Contributions

Employee NICs

Following the Autumn Statement in 2023 the government cut the main rate of Class 1 employee NICs
from 12% to 10% from 6 January 2024. There will now be a further cut in the main rate of Class 1
employee NICs from 10% to 8% from 6 April 2024.
The higher rate of employee NICs, applying to earnings above £50,270, remains at 2%.
According to the government, building on changes made at the Autumn Statement the government
has cut taxes again for 29 million people with the average worker on £35,400 receiving a cut in
2024/25 of over £900.

The self-employed and NICs

The self-employed generally have to pay two forms of NICs: Class 2 and Class 4.
Firstly, the government will amend Class 2 self-employed NICs from 6 April 2024. This means that,
from 6 April 2024:

  • Self-employed people with profits above £6,725 will continue to get access to contributory
    benefits, including the State Pension, through a National Insurance credit, without paying NICs.
  • Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to
    contributory benefits including the State Pension will continue to be able to do so.

Secondly, the government will cut the main rate of Class 4 self-employed NICs from 9% to 6% from 6 April 2024.

According to the government, combined with the removal of the requirement to pay Class 2 NICs, this will save an average self-employed person on £28,000 £650 a year.

Employer NICs

Employer NI contributions will continue to be due at 13.8% on earnings over £9,100.

Furnished Holiday Lettings

The Furnished Holiday Lettings (FHL) tax regime will be abolished from April 2025. Draft legislation is to be published and will include anti-forestalling measures that will apply from 6 March 2024. One effect of abolishing the rules will be that short-term furnished holiday lets and longer-term residential lets are treated the same for tax purposes and individuals will no longer need to report the two income streams separately.

However, those with furnished holiday lets are likely to see increases in their tax bills as a consequence of the anticipated loss of the following tax reliefs:

  • Full deductibility of mortgage interest
  • Potential to claim Business Asset Disposal Relief on eventual sale of property
  • Ability to make pension contributions out of FHL income

Non-UK domiciled individuals

From 6 April 2025, the current remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a residence-based regime. Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the last ten years. Anyone who has been tax resident in the UK for more than four years will pay UK tax on their worldwide income and gains.

The government will also introduce transitional arrangements for existing non-UK domiciled individuals claiming the remittance basis.

Inheritance Tax (IHT) is currently a domicile-based system. The government announced an intention to move to a residence-based system, subject to consultation, but no changes to IHT will take effect before 6 April 2025.

Pension tax limits

There were no changes made in the Budget to pensions allowances. The annual allowance remains at £60,000 for those with ‘adjusted incomes’ of less than £260,000.

Individual savings accounts

The government is freezing the limits on Individual Savings Accounts (ISAs) (£20,000), Junior Individual Savings Accounts (£9,000), Lifetime Individual Savings Accounts (£4,000 excluding government bonus) and Child Trust Funds (£9,000) for 2024/25.

The government also announced that it is looking to introduce the UK ISA.  This will have a new ISA allowance of £5,000 in addition to the existing ISA allowance, and will provide a new tax-free savings opportunity for people to invest in the UK.


Corporation Tax rates

The government has confirmed that the rates of Corporation Tax will remain unchanged, which means that, from April 2024, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.

Capital allowances

The Annual Investment Allowance (AIA) is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit remains at £1 million.

The Full Expensing rules for companies also allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is unused and not second-hand. Similar rules apply to integral features and long life assets at a rate of 50%. The government announced in the Autumn Statement 2023 that both allowances will be made permanent.

Research and Development relief

As announced in the Autumn Statement 2023, the existing Research and Development Expenditure Credit (RDEC) and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024 being claimed in the merged scheme. The rate under the merged scheme will be set at the current RDEC rate of 20%. This is significantly less generous than the SME regime was historically. 

The changes also provide additional relief for loss-making Research and Development (R&D) intensive SMEs through a higher rate of payable tax credit from April 2023, as a feature of the existing SME scheme. Those entitled to this higher rate would, from April 2024, continue to claim under rules similar to the current SME scheme rather than under the new RDEC scheme.

A number of other changes will apply to the new regime from April 2024, including restrictions on R&D being undertaken outside the UK, or by non-UK resident workers. 

Taxable benefits for company cars and vans

The rates of tax for company cars remain frozen for 2024/25. Rates increase by 1% each year from 2025/26 to 2027/28, subject to a maximum of 37%. 

This means that the charge for electric cars will rise from 2% to 5% over that period.

From 6 April 2024 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars remains £27,800.

For 2024/25 van benefit remains £3,960 per van and the van fuel benefit charge where fuel is provided for private use remains £757. 

The VAT registration threshold

After many years of having been frozen, the government will increase the VAT registration threshold from £85,000 to £90,000 and the deregistration threshold from £83,000 to £88,000 from 1 April 2024. The government has stated that these new thresholds will be frozen but has not stated for how long.

National Living Wage and National Minimum Wage

The rates which will apply from 1 April 2024 are as follows:

NLW (21+)18-2016-17Apprentices
From 1 April 2024£11.44£8.60£6.40£6.40

The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.

Business Rates

The small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. The standard multiplier will be uprated in line with the Consumer Prices Index for September 2023. These changes will take effect from 1 April 2024 in England.

Capital Taxes

Capital Gains Tax rates and allowances

The main Capital Gains Tax (CGT) rate remains at 10%, to the extent that any income tax basic rate band is available, and 20% thereafter. The CGT annual exempt amount will be reduced from £6,000 to £3,000 from 6 April 2024.

Higher rates apply for certain gains, mainly chargeable gains on residential properties, with the exception of any element that qualifies for Private Residence Relief. These rates are reduced from 18% and 28% in 2023/24 to 18% and 24% in 2024/25.

There is still potential to qualify for a 10% rate on gains up to £1 million under Business Asset Disposal Relief and £10 million under Investors’ Relief.

Inheritance Tax 

Despite much speculation before the Budget, Inheritance Tax (IHT) has not been abolished. Nor has there been any increase to the nil rate band of £325,000 or to the additional nil rate band, called the ‘residence nil rate band’, of £175,000.

To ensure compatibility with EU law, action was taken many years ago to expand the scope of Agricultural Property Relief (APR) and Woodlands Relief to property located in the European Economic Area. Following Brexit, this measure reverses those changes and also removes APR from property in the Channel Islands and Isle of Man. Broadly, the changes take effect from 6 April 2024.

Other Matters

  • Multiple Dwellings Relief from Stamp Duty Land Tax will be abolished, broadly from 1 June 2024 but subject to transitional rules, for purchasers of residential property in England and Northern Ireland.
  • The government will mandate the reporting and paying of income tax and Class 1A NICs on benefits in kind via payroll software from April 2026. This is likely to represent a significant change for most SMEs who offer benefits in kind and will potentially mark the end of P11Ds.
  • The government will legislate to introduce a route for people to apply for National Insurance Credits for parents and carers for tax years where they have not claimed Child Benefit, to ensure that people do not miss out on their State Pension entitlement.
  • To simplify the process for employees claiming tax relief on their expenses, and for HMRC to automatically process claims, the government is designing a new, online service for employees to claim tax relief on all of their expenses in one place.

Get in touch

Please do get in touch if you have any queries about the implications the budget may have on you or your business on

T: 01625 669669 F: 01625 669880 E: info@harts-ltd.com