Spring Budget 2024: A wealth of reforms aimed at individuals, but little to support UK PLC

Alexandra Docherty

Alexandra Docherty

Partner and Head of Private Client Tax

Senior tax experts from UK accountancy and business advisory firm Johnston Carmichael, have commented on the 2024 Spring Budget.

Alex Docherty, Partner and Head of Private Client Tax, said:

“It was no surprise that with a general election looming later this year that Jeremy Hunt delivered his Spring Budget with the individual at the heart of it. Only time will tell what the public think of his measures, but the Chancellor came out fighting today to make the most of the money available to him to encourage employment”.

“The headline was a 2% cut in the rate of national insurance for both the employed and self-employed, which sees the main rate reduce to 8% and 6% respectively. Taking account of the announcements he made in the Autumn this will save the average worker £900.

“Next on his list for the individual was reforming the vote killer that was the High Income Child Benefit Charge rules. 

“These rules meant that households where one parent was earning more than £50,000 was hit with a tax charge, with all child benefit being removed where earnings reached £60,000. From 6 April 2024 the earnings threshold will be increased to £60,000 and individuals can earn up to £80,000 before child benefit is lost entirely. This measure will provide immediate help for families. 

“Going forward, the government will restructure this charge to base it on total household earnings, so that families with one high earner and one lower can retain some benefit. 

“It was not all good news, though. Property took a hit on several levels - namely furnished holiday lets - but also through stamp duty land tax."

“A number of the special tax treatments afforded to furnished holiday letting (FHLs), when compared with standard longer term let properties, are to be abolished from 6 April 2025, including:

  • exemption from mortgage interest cost restriction rules
  • beneficial capital allowance rules – tax relief on certain capital expenditure
  • access to reliefs from Capital Gains Tax (CGT) - holdover relief, rollover relief and business asset disposal relief (BADR)
  • inclusion in relevant UK earnings when calculating maximum pension relief

“FHLs will therefore, from 6 April 2025, be subject to a similar tax regime to that of standard UK (long term) lets. For voters living in coastal villages struggling to get on the property ladder today’s announcements may be met with hope that this brings properties to market at possibly a more reasonable price. However, voters with second homes or businesses operating portfolios of units are likely to view the reforms with concern.

“It was not all doom and gloom though for those owning a second home. The Chancellor announced a reduction in the higher rate of Capital Gains Tax (CGT) that applies on a disposal of a residential property, the rate reducing from 28% to 24% from 6 April 2024. 

“Private Residence Relief will remain in place. This is a relief from CGT that is available where a property has been occupied as an individual’s main home at some time in the period of ownership, with various conditions applying.

“Recent murmurings that the ‘non-dom’ regime would be impacted in the budget proved to be reality and not simply a rumour. From April 2025 the UK’s beneficial tax regime which applies to individuals who are not domiciled in the UK will be abolished. 

“Instead, a new system will be introduced for individuals moving to the UK. There will be a four-year period during which their foreign income and gains will not be subject to UK tax, meaning funds can be remitted into the UK during this period without charge. It is hoped this will encourage investment and significantly simplify the tax rules surrounding this area.

“For existing UK tax residents who have not yet been here for four years, they can enjoy this new regime until they complete their fourth year of UK tax residence.

“After four years these individuals will then pay UK tax based on normal UK rules. For those non-domiciled individuals who have resided in the UK for much longer there will be a transitional period in 2025/26 and 2026/27 aimed at softening the blow of these changes.

“Finally, inheritance tax has been a hot topic for the past few months, but the only significant change announced today is to Agricultural Property Relief. From 6 April 2025, the scope of Agricultural Property Relief will include land that is used for environmental purposes alongside land used for food production. This is welcomed and recognises the key role the farming community plays in protecting and enhancing the natural environment.

“Will these changes go far enough to swing the polls? That is yet to be seen.”

Visit our Budget Hub to read our full analysis of the Spring Budget announcements.

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