March 2024 Budget – Initial reaction

As ever pre-budget speculation has been rife. With an election looming, the government want to be seen as lowering taxes and making life easier for working people. However, the announcement that the UK slipped into recession in the last quarter of 2023 left people wondering where the money to make any cuts would come from. In the Autumn statement, a cut in National Insurance was announced, but whilst this was introduced from January for employees, the self-employed have yet to see any benefit, because it does not apply to them until April.  With 24 hours to go, the papers and other news sources were announcing a further 2p cut in National insurance, whilst considering a number of options for funding this, ranging from tax on vaping to abolition of the tax breaks for non-domiciled UK residents.

Contrary to expectation, there was no white rabbit pulled out of the hat. The actual budget speech was quite adversarial. Every positive announcement was contrasted with Labour’s approach, and we were left in no doubt that this was intended to be an election budget.  Of course, with the prime minister hinting that the election might be in the Autumn, there is potential for another give away immediately prior to the going to the vote.

So what were the highlights?

Individuals – measures applying from April 2024

• As expected, national insurance was cut by a further 2% from 6^th April For employees this is a reduction from 10% to 8% delivering a saving of £450 a year (£900 when combined with the Autumn Statement cut).  For the self -employed it is a reduction from 8% to 6%, saving them £350 a year (£650 when combined with the Autumn Statement cut).
• The threshold for the High-Income Child Benefit charge was raised to £60,000 p.a. (from £50K), with the charge reducing to 1% of the benefit for each £200 of income between £60K and £80K. Plans were announced to reform the charge to make it assessable on household income by April 2026 rather than on the income of the highest earner.
• The higher rate of capital gains tax on residential property will be reduced to 24% (from 28%). We are told that this will increase tax take rather than reducing it. Any gains that fall within an individual’s basic rate band will continue to be taxed at 18%.
• Legislation will be introduced to restrict the scope of IHT agricultural property relief and woodlands relief to UK property.

Businesses

• The VAT registration threshold is increasing from £85,000 to £90,000
• A new audio-visual expenditure credit will be introduced for films with budgets up to £15million.
• Theatre tax relief, Orchestral tax relief and Museums and Galleries relief were made permanent although rates will fall slightly from April 2025.

Coming Soon

• The government will consult on extending full expensing for companies to leased assets
• Multiple dwellings relief from stamp duty land tax will be abolished for transactions with an effective date on or after 1 June 2024.
• The Furnished Holiday Lettings tax regime will be abolished from April 2025. This will mean that landlords who let out short-term furnished holiday properties will be taxed in the same way as those who let out residential properties to longer-term tenants.
• The government will introduce a new ISAfor investment in UK equity with its own allowance of £5,000 a year. The government will consult on the details at a later date.
• The remittance basis for Non-domiciled individuals will be abolished from April 2025, to be replaced by a residence-based regime. New arrivals to the UK opting into the regime will not pay UK tax on foreign income and gains for the first four years of their tax residence.

And finally – Good news all round

• The main rates of fuel duty remain frozen again until March 2025 with the temporary 5p cut also extended.
• The alcohol duty freeze has been extended until 1 February 2025

Our full budget summary will be available tomorrow.