Spring Budget 2024: Our key takeaways

Phil Blackburn, 6 March 2024

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Chancellor, Jeremy Hunt, delivered the Spring Budget on 6 March 2024, which may be the last full fiscal event before the next General Election. Here are our key takeaways.

National insurance

The key headline-grabbing change, with probably the widest impact, is the 2% reduction in national insurance contributions (NIC) for employees and the self-employed, which was pre-leaked to the press and had made the overnight headlines.

This reduction is forecast to save taxpayers £47 billion in NIC between April 2024 and March 2029. This is obviously a welcome boost for working households and goes some way to mitigate the impact of the historic small increases in, and subsequent freezing of, personal allowances and tax rate bands.

The annual NIC saving is around £9 billion whilst the annual increased tax take is around £20 billion. This is because personal allowances and rate bands haven’t kept track with inflation.

Non-dom tax status

The other headline-grabbing change is the abolition of the “non-dom” tax status from April 2025. This change has been rumoured to be on the cards for many years, and it’s perhaps a little surprising that it’s finally been announced.

In a nutshell, from April 2025, there will be no non-dom regime. New arrivers to the UK will have a four year exemption from being taxed on their overseas income and gains, after which they'll be taxed on worldwide income.

There will be transitional provisions to soften the impact of the changes on existing non-doms. This will include a window of opportunity to remit pre-6 April 2025 income and gains to the UK by 5 April 2027 and pay a lower rate of tax (12%) plus the potential to rebase assets to 5 April 2019 for capital gains tax purposes.

Inheritance tax

Alongside these changes the government will consult on a new, residence-based regime for Inheritance Tax to apply from April 2025. This seems likely to include a 10-year residence period to bring all worldwide assets into the scope of IHT, with a further 10 year ‘tail’ after ceasing UK residence.

Excluded Property Trusts will retain their IHT beneficial status where they are established by non-doms before 6 April 2025. New arrivers are expected to be able to create such trusts within their first 10 years in the UK.

It seems quite clear there will be a lot of interesting discussions with existing non-doms, helping them understand the impact on them and their options.

Property tax

The top rate of capital gains tax (CGT) on residential property will be reduced from 28% to 24% with effect from 6 April 2024. Unusually, the reduced tax rate is forecast to increase the CGT tax take as the Government believe that there’s pent up demand from owners of second homes and investment properties to sell their properties.

Our experience is that the tax and regulatory changes for landlords over the last decade have made it a much less appealing sector for the casual (and not so casual) investor.

Fuel and alcohol duty

Moving onto duties, there’s a further freeze of fuel and alcohol duties which will save taxpayers around £8 billion over the next year.

Other measures

Other measures impacting families include re-calibrating child tax benefit so that entitlement is based on household income and not just the highest earner. There will be winners and may be some losers under the proposed changes over the next couple of years.

There were a number of other measures mentioned, including the taxation of furnished holiday lets, increased Stamp Duty Land Tax charges for some residential property transactions and increased resources for HMRC to collect more tax.

Overall, the package of measures announced is forecast to cost UK treasury around £45 billion between 2024/25 to 2028/29, and the forecasts indicate this will be paid for out of reduced Government spending, including borrowing, over that period.

Interestingly, the OBR indicate there is very little headroom in the forecasts, and the OBR note that based on historical accuracy of such forecasts, there is only 54% confidence that the Governments fiscal target will be met. It won’t be known for some time, long after the next General Election, whether the forecasts are accurate, so it may remain for a future Government to pay for this tax giveaway.

How can we help?

Our tax specialists will be analysing the tax changes over the days and weeks ahead and we’ll be contacting our clients to explain how any of the above measures may impact them.

Please look out for our detailed Budget summary, which we will be sharing with you in the next few days.

If you need guidance regarding any of the above topics, please get in touch with Partner, Phil Blackburn (philblackburn@lubbockfine.co.uk).