The Spring Statement 2024
The Spring Statement 2024 – The details you need to know
The Spring statement, presented by the Chancellor Jeremy Hunt, announced the following changes
Personal taxes
Following the reduction of Class 4 National Insurance in the Autumn Statement, self employed individuals will also benefit from a further reduction in the rate of Class 4 tax from 8% to 6% on their profits from 6 April 2024.
At Autumn Statement 2023, it was announced that they would be removing the requirement to pay Class 2 National Insurance Contributions from 6 April 2024. The government will consult on how it will deliver Class 2 National Insurance contributions abolition later this year. This will save an average self-employed person on £28,000 around £650 per year.
The high-income child benefit charge is currently subject to a wider review. At this time, Hunt has announced that the tapering threshold has been increased to £60,000 and child benefit becomes fully repayable when the higher earner receives £80,000 per annum.
There have been no changes to the dividend rates. The rates remain as follows:
Ordinary rate 8.75%
Higher rate 33.75%
Additional rate 39.35%
These figures apply to dividend income received above the tax – free dividend allowance of £500 in the 2024/2025 tax year.
Business Tax
The corporation tax charge will remain the same for the year beginning 1 April 2025. This is 25% main rate for profits over £250,000 and small profits rate of 19% for profits at £50,000 or less. For businesses with profits between £50,000 and £250,000, they will pay tax at the main rate of 25% but this will be reduced by a marginal relief.
As announced at the Autumn 2023 statement, full expensing, and the 50% first year allowance for special rate assets were made permanent. Expenditure for plant and machinery is excluded from this.
Creative industries
The government is committed to the success of sectors experiencing high growth such as creative industries, advanced manufacturing, green industries, digital technology, and AI.
The government is announcing over £1 billion of new tax reliefs for the UK’s world-leading creative industries over the next 5 years.
This includes introducing a 40% relief from business rates for eligible film studios in England for the next 10 years; introducing a new UK Independent Film Tax Credit; and increasing the rate of tax credit by 5% and removing the 80% cap for visual effects costs in the Audio-Visual Expenditure Credit.
VAT
Jeremy Hunt announced that the turnover threshold for registering for VAT is increasing from £85,000 to £90,000.
In addition, the taxable turner threshold which determines whether a person may apply for deregistration will be increased from £83,000 to £88,000.
These changes will be effective from 1 April 2024.
The government aim to support small businesses with the administrative and financial impact of VAT charges. This change is expected to mean that 28,000 fewer micro businesses will need to register for VAT in 2024 to 2025.
Employment Tax
The standard rate of employees National Insurance Contribution (Class 1) will reduce by a further 2%. Taking the rate from 10% to 8% from 6 April 2024.
The employers Nationals Insurance Contribution rate will remain the same.
Stamp duty land tax
Hunt announced that multiple dwellings relief (MDR) will be abolished with effect from 1 June 2024.
Property transactions with contracts that were exchanged on or before 6 March 2024 will continue to benefit from the relief, regardless of when they complete (as long as there are no variations of the contract), as will any other purchases that are completed before 1 June 2024.
Residential property
The furnished holiday let tax relief regime is abolished from 6 April 2025 for income tax and capital gains tax and 1 April 2025 for corporation tax eliminating the tax advantage for landlords who let out short-term furnished holiday properties over those who let out residential properties to longer-term tenants. Draft legislation will be published in due course.
The higher rate of Capital Gains Tax on the sale of residential properties is reduced from 28% to 24%.
Other
Non – UK Domicile
The government will abolish the remittance basis of taxation for non-UK domiciled individuals and replace it with a simpler residence-based regime which will take effect from 6 April 2025.
UK Individual Savings Account (ISA)
As announced at Spring Budget 2024, the government will introduce a new UK ISA with its own allowance of £5,000 a year. The government will consult on the details at a later date.
Fuel duty
This measure extends the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended at Spring Budget in March 2023, for a further 12 months.
This measure is intended to maintain the rates of fuel duty at the reduced levels set on 23 March 2022 to support households and businesses. This has now been extended to March 2025.
Please use the link at the end of this articles to the HMRC website for the details of the fuel duty rates.
Alcohol duty
To further support alcohol producers, pubs, and the hospitality sector, and to help consumers with the cost of living, the government will freeze alcohol duty from 1 August 2024 until 1 February 2025. This extends the six-month freeze announced at Autumn Statement 2023. This will result in 2p less duty on an average pint of beer, 1p less duty on an average pint of cider, 10p less duty on an average bottle of wine, and 33p less duty on an average bottle of spirits, than if the planned duty increase had gone ahead.
If you require any further detail on this article, please use the link below to the HM Revenue and Customs published statement.
If you have any questions, please do not hesitate to contact the Spirare Team.
Useful links:
Published statement.
https://www.gov.uk/government/publications/spring-budget-2024
Fuel duty rates.
https://www.gov.uk/government/publications/fuel-duty-extending-the-temporary-cut-in-rates-to-march-2025/extension-to-the-cut-in-fuel-duty-rates-to-march-2025