Spring Budget 2024 Summary
The Chancellor presented the last spring budget before the election. He emphasised the importance of implementing reforms to ensure a straightforward and equitable tax system that aligns with economic changes and aids public finances. Similar to previous budgets, ongoing discussions are ongoing, and additional information will be released in the coming weeks.
This guide contains a summary of the key measures announced by the Chancellor in the 2024 Spring Budget.
For our complete list of the 2024/25 Tax Rates and Allowances, please click here, and for 2024/24 Stamp Duty Land Taxes, please click here.
Key Tax Rates
| Income tax rates: England, Wales & Northern Ireland (non-dividend income) | 2024/25 | 2023/24 |
| 0% starting rate for savings only | Up to £5,000 | Up to £5,000 |
| 0% on personal allowance (subject to any clawback of PA) | £0 – £12,570 | £0 – £12,570 |
| 20% basic rate tax | £12,571 – £50,270 | £12,571 – £50,270 |
| 40% higher rate tax | £50,271 – £125.140 | £50,271 – £125.140 |
| 45% additional rate tax | Above £125,140 | Above £125,140 |
| Scottish rates of income tax (non-dividend income) | ||
| 0% on personal allowance (subject to any clawback of PA) | £0 – £12,570 | £0 – £12,570 |
| 19% starting rate | £12,571 – £14,876 | £12,571 – £14,732 |
| 20% basic rate tax | £14,877 – £26,561 | £14,733 – £25,688 |
| 21% intermediate rate tax | £26,562 – £43,662 | £25,689 – £43,662 |
| 42% higher rate tax | £43,663 – £75,000 | £43,663 – £125,140 |
| 45% advanced rate | £75,001 – £125,140 | n/a |
| 48% top rate (47% for 2023-24) | Above £125,140 | Above £125,140 |
| National insurance | 2024/25 | 2023/24 |
| Lower earnings limit, primary class 1 (per week) | £123 | Married women’s rate above the upper earnings limit |
| Upper earnings limit (UEL), primary class 1 (per week) | £967 | £967 |
| Primary threshold (PT) (per week) | £242 | £242 |
| Secondary threshold (per week) | £175 | £175 |
| Employment allowance (per year/employer) | £5,000 | £5,000 |
| Employee’s primary class 1 rate between PT and UEL From 6 April 2023 to 5 January 2024 From 6 January 2024 to 5 April 2024 | 8% | 12% 10% |
| Employee’s primary class 1 rate above the upper earnings limit | 2% | 2% |
| Married woman’s reduced rate between PT and UEL From 6 April 2023 to 5 January 2024 From 6 January 2024 to 5 April 2024 | 1.85% | 5.85% 3.85% |
| Class 2 rate (per week where profits are above the lower profits limit threshold | 2% | 2% |
| Employer’s secondary class 1 rate above secondary threshold | 13.8% | 13.8% |
| Class 2 small profits threshold (per year) | £6,725 | £6,725 |
| Class 2 lower profits threshold (per year) | n/a | £12,570 |
| Class 2 small profit threshold (voluntary- per week) | £3.45 | £3.45 |
| Class 2 rate (per week where profits are above lower profits limit threshold | £0 | £3.45 |
| Class 3 voluntary rate (per week) | £17.45 | £17.45 |
| Class 4 lower profits limit | £12,570 | £12,570 |
| Class 4 upper profits limit | £50,270 | £50,270 |
| Class 4 rate between lower profits limit and upper profits limit | 6% | 9% |
| Class 4 rate above upper profits limit | 2% | 2% |
| Class 1A/1B NIC | 13.8% | 13.8% |
Businesses
‘Full expensing’ deduction for leased assets
The chancellor announced plans to introduce full expensing tax relief for leased assets. This relief will allow businesses to enhance their efficiency by leasing assets. It will promote productivity by providing business owners access to the latest, cleanest, and most efficient plant and machinery. There is currently no specified timeline for the commencement of this relief, and its implementation is dependent on the publication of draft legislation.
UK Independent Film Tax Credit
The Chancellor introduced the UK Independent Film Tax Credit (IFTC) in the Spring Budget of 2024. Eligible films can participate in the enhanced Audio-Visual Expenditure Credit (AVEC), which allows them to claim 53% of their qualifying expenditure. To qualify, productions must have started principal photography on or after 1 April 2024, and only expenses incurred from that date can be claimed. Starting from 1 April 2025 claims for expenditure incurred from 1 April 2024 can be submitted to HMRC as long as the film commences principal photography after 1 April 2024.
Theatre Tax Relief
Legislation will be introduced in the Spring Finance Bill 2024 to establish permanent headline rates of relief for Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Exhibition Tax Relief. The rates will be set at 40% for non-touring productions and 45% for touring and orchestral productions. As announced during the Spring Budget 2024, these rates will come into effect on 1 April 2025.
Recovery loan scheme
The Growth Guarantee Scheme will replace the current Recovery Loan Scheme and be extended until June 2024. The scheme’s terms will remain the same, offering lenders and businesses consistency and continuity. It will continue to provide a 70% guarantee to participating lenders for loans up to £2m granted to smaller businesses.
VAT Thresholds
Starting from 1st April 2024, the threshold for taxable turnover that determines the requirement for VAT registration will rise from £85,000 to £90,000.
The threshold for taxable turnover, used to determine eligibility for deregistration, will be raised from £83,000 to £88,000.
The Furnished Holiday Lettings (FHL) regime abolished
Starting in April 2025, the government plans to cancel the FHL tax system, thereby removing the tax benefits landlords receive when letting furnished holiday properties for short periods compared to those who rent residential properties to long-term tenants.
Currently, landlords utilising the furnished holiday lets system can subtract the complete expense of their mortgage interest payments from their rental income. They are also eligible for furniture capital allowances, pay less capital gains tax (CGT) upon selling, and are entitled to CGT rollover relief, among other benefits.
Individuals
Income tax
As previously stated, the personal tax thresholds, including the personal allowance and the basic and higher-rate thresholds for income tax, will continue to be held at their current amounts of £12,570 and £50,270 until April 2028. From 6 April 2023, the additional rate threshold was already lowered from £150,000 to £125,140.
Personal allowance for higher rates from 2023/24
When the annual income exceeds £100,000, the personal allowance is gradually reduced by £1 for every £2 of income exceeding £100,000. This reduction continues until the entire personal allowance is lost.
The personal allowance loss results in a 40% tax on the extra £2 of income, with an additional 40% tax on the lost £1 allowance. As a result, the marginal rate reaches 60%, which remains until £125,140 (£100,000 + (£12,570 x 2)). Beyond this point, the entire personal allowance is forfeited.
National insurance
The government will draft legislation to decrease the primary Class 1 National Insurance contributions’ main rate by 2 percentage points, from 10% to 8%, starting from 6 April 2024.
From April 6, 2024, the government will implement new legislation to lower the primary rate of Class 4 National Insurance contributions by two percentage points, reducing it from 8% to 6% for those who are self-employed.
This reduction is in addition to the previously disclosed decrease from 9% to 8% in the main rate of Class 4 National Insurance contributions; there will be a further reduction from 9% to 6% starting on 6 April 2024.
Reduced annual exemption for Capital Gains Tax
Starting April 2024, individuals will witness a decrease in the annual exemption amount for capital gains tax, as stated in an earlier announcement, from £6,000 to £3,000.
From April 2024, the Capital Gains Tax (CGT) rate paid by individuals in the higher tax bracket will decrease to 24% when they dispose of residential properties.
New residence-based system to replace Non-dom status
The remittance basis of taxation for individuals not domiciled in the UK will be eliminated by the government and substituted with a more straightforward residence-based system, effective from 6 April 2025. Additionally, the government has stated its intention to transition to a residence-based regime for inheritance tax. Plans include publishing a policy consultation on these modifications and introducing draft legislation. This is expected to occur later in the year.
Threshold for the High Income Child Benefit Charge.
Legislation in the Spring Finance Bill 2024 will raise the starting threshold for High Income Child Benefit Charge (HICBC) adjusted net income to £60,000. This adjustment will take effect in the 2024-25 tax year. Additionally, section 681C will be amended to include a HICBC taper for incomes between £60,000 and £80,000. Individuals falling within this income range will have the HICBC rate halved, resulting in a charge of 1% for every £200 of income exceeding £60,000. Taxpayers with income over £80,000 will be subject to repaying the full amount of child benefit paid.
New British ISA investment allowance
The UK government has declared the forthcoming launch of the UK ISA, which will provide individuals with a fresh savings opportunity. With a new ISA allowance of £5,000, on top of the existing annual limit of £20,000, this initiative will enable tax-free investments within the UK. Following a consultation period from 6 March 2024 to 6 June 2024, the UK ISA will be implemented.
Other
Planned Abolition of Stamp Duty Land Tax (SDLT) relief for multiple dwellings
From 1 June 2024, buyers of residential properties in England and Northern Ireland will no longer qualify for Multiple Dwellings Relief (MDR) if they acquire more than one dwelling in a single transaction or linked transactions. MDR is a Stamp Duty Land Tax (SDLT) relief designed for bulk purchases. Normally, the tax rate is determined by the total consideration for the land. However, MDR allows purchasers who buy two or more dwellings in a single transaction or linked transactions to calculate the tax based on the average value of the purchased dwellings rather than their combined value.
Additional resources for HMRC
The government is taking additional steps to address tax non-compliance. This includes increasing investments in HMRC’s ability to collect tax debts. They are building on previous actions, such as cracking down on tax avoidance promoters, and are now focusing on enhancing taxpayer safeguards. This involves making it more difficult for individuals who provide harmful tax advice. The government is currently consulting on potential measures to strengthen the regulatory framework in the tax advice market and considering the requirement for tax advisers to register with HMRC when representing clients.
Legal Notice
Release date: March 2024
Mercian Accountants prepared this basic guide for their clients. It is important to note that this guide should not be considered as a definitive source, as individual situations may differ. If needed, it is advisable to seek specific advice.
13135 Image Size: 1280 x 853