The Chancellor, Jeremy Hunt, today delivered his Spring Budget. With a general election this year, it is the last chance for the Chancellor to help to ‘shift the dial’ prior to the election. Unsurprisingly, the Chancellor has chosen to direct the key tax savings at the voters themselves rather than business.

Below, we look at the key announcements below that will affect you and your business.

National insurance

The centre piece of today’s Budget was the widely leaked 2p cut in the employee’s national insurance rate. By reducing the main rate of employee NI by another 2p on top of the 2p cut last year, this will save the average worker another £450, meaning an overall tax bill saving for an average worker of £900 per year.

Clearly, the pay packet boost is good news for employees but also one which might benefit business owners who may face reduced calls for rises during the next pay round. However, fiscal drag over the last few years with thresholds being frozen for income tax means that many taxpayers will still be worse off.

The Chancellor also announced self-employed national insurance will be cut from 8% to 6% meaning an average tax cut for a self-employed person of £650. This is great news for the many self-employed individuals across the UK.

Capital allowances

Last year’s Spring Budget saw the government introduce full expensing from April 2023 to the end of March 2026. Full expensing allows companies to claim 100% capital allowances first-year relief on qualifying plant and machinery investments.

The Chancellor announced a future extension of full expensing to include leased assets as well as purchased assets. The timeline for this being introduced has not been defined as the Chancellor said it would be introduced ‘as soon as it’s affordable’.

VAT registration threshold

Today’s announcements also saw the first increase in the VAT threshold in 7 years. From April 1st, the VAT registration threshold will be increased from £85,000 to £90,000. This means smaller businesses may benefit from not having the administrative burden that VAT registration creates.

Fuel duty freeze

The Chancellor today announced the continued freeze on fuel duty. This will undoubtedly continue to help businesses with high fuel costs and help ease one of the areas of rising business costs.

Recovery loan scheme/Growth guarantee scheme

£200m of additional funding was announced to fund the extension of the recovery loan scheme as it transitions to the growth guarantee scheme. This will help some SMEs access the finance they need.

The Recovery Loan Scheme supports small and medium sized businesses by providing access to the finance they need to grow and invest. Finance can be used for any legitimate business purpose, including working capital or investment.

Property taxation

There were some unexpected announcements on property taxation today, covering Furnished Holiday Lettings (FHL), Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief (MDR) and Capital Gains Tax (CGT). The announcements on property tax were as follows:

Abolishing the furnished holiday lettings regime

This is a shock announcement for those people that currently benefit from the special tax rules for properties that are rented and qualify as Furnished Holiday Lettings (FHLs). The Chancellor announced that he is going to abolish the furnished holiday lettings regime from 6 April 2025. This may will lead to many FHL renters who are sitting on a sizeable property gains looking to sell before that date to take advantage of the lower rates of capital gains tax that apply when selling their property business.

Multiple Dwellings Relief

There was also an announcement on stamp duty relief for people who purchase more than one dwelling in a single transaction known as Multiple Dwellings Relief. The Chancellor announced the abolition of this relief. Another blow for property investors. Property transactions with contracts that were exchanged on or before Budget Day will continue to benefit from the relief regardless of when they complete, as will any other purchases that are completed before 1 June 2024.

Capital Gains Tax

Good news however for some property investors on Capital Gains Tax on residential property, when the announcement was made on the reduction of the higher rate of property Capital Gains Tax from 28% to 24%. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.

Non-domiciliaries

Another surprise announcement today with the abolition of the current non-domicile tax regime. The Chancellor will introduce a simpler residency-based system from 6 April 2025 giving new arrivals to the UK a four year period of UK residency in which they will not pay any tax on foreign income or gains.

After four years, those who continue to live in the UK will pay the same tax as other UK residents. However, there will be transitional arrangements whereby non-doms currently claiming the remittance basis will benefit from a two year period in which they will be encouraged to bring in overseas wealth to the UK at a lower rate of tax to spend and invest here.

Pensions & investments

There were many predictions about pensions and a focus on encouraging UK investment. Whilst there were few guaranteed changes announced today, there was a commitment to continue to investigate certain areas around pension funds including:

• Giving new powers to The Pensions Regulator and Financial Conduct Authority to make it easier for pension funds to invest in UK growth opportunities.
• Continuing to explore how savers can be allowed to take their pension pots with them when they change job.
• Introduction of a new British savings bond delivered through National Savings and investment, offering savers a guaranteed rate fixed for three years.
• Reform of the ISA system to encourage more people to invest in UK assets. After a consultation on its implementation, the introduction of a new British ISA which will allow an additional £5000 annual investment on top of the existing ISA allowance for investments in UK equity.

High Income Child Benefit Charge (HICBC)

The Chancellor acknowledged that the current scheme of HICBC is not working. The government plans to administer the HICBC on a household rather than an individual basis by April 2026. As an interim measure the HICBC threshold will be increased to £60,000 from April 2024, and the rate at which HICBC is charged will also be halved so that Child Benefit is not fully withdrawn until individuals earn £80,000 or higher.

How can you prepare for these changes?

Seeking advice following the Budget and before new tax changes take effect in April is key. How you plan for changes will depend on your individual and business circumstances.

With the tax and business landscape changing, now is an important time to consider your personal and corporate tax planning. Contact us today for further help and advice on tax planning for you and your business.