Jeremy Hunt, the Chancellor of the Exchequer stood up in a packed and rather rowdy House of Commons yesterday to deliver what is likely to be the last budget before the general election, but what does it mean for you?
National Insurance
It was no surprise that a cut to National Insurance (NI) was announced, after all it had been widely spoken about in the media in the days leading up to the budget. So what does this cut mean exactly? Another 2%, on top of the 2% announced last Autumn will see NI drop by a total of 4%, for those on PAYE to 8% and for the self-employed to 6%. The new rates will come into force from the new tax year on 6th April. Although this does not help pensioners as they don't pay NI, Jeremy Hunt explained that it was unfair that those working were effectively taxed twice and he would look to reduce or even abolish NI at some point in the future, no timelines for this were given.
Child Benefit
For those families with young children there was some good news, the threshold for applying the high income benefit charge has been raised by £10k to £60k and the tapering limit has also been raised to £80k.
This is an interim measure as it was also announced that the current system will be revised from 2026 to a household income based system rather than the current system which focuses on individuals
VAT Threshold
There was also some good news for small business owners, the Federation of Small Businesses (FSB) has been campaigning to get the VAT threshold increased, this has been frozen the last 7 years so was well overdue a change. The threshold for registration has been raised by £5k to £90,00 from 1st April. For those businesses who don't want to register for VAT this gives them the prospect of another £5k of earnings per year.
Property
Multi-Dwelling relief for stamp duty land tax (SDLT) has been abolished and will take effect on completions on or after 1st June 2024 and for exchanges after 6th April 2024.
The special rate treatment for Furnished Holiday lets has also been abolished and finally the higher rate of Capital Gains Tax on property has been reduced from 28% to 24%.
Other Duties
Alcohol Duty was frozen until February 2025, and Fuel Duty was frozen again for 12 months.
The Chancellor did announce that there would be a duty added to vaping and to ensure it was still cheaper that smoking tobacco the same duty would be applied to tobacco products. The amounts were not announced during his budget speech.
How will this be paid for?
When tax cuts are announced there has to be some tax raising measures elsewhere to pay for it and balance the books. The most significant measure is the abolition of non domicile regime from 6th April 2025.
This will be replaced with an exemption for foreign income gains for the first 4 years of UK residency, providing they have not been resident in the UK in the last 1 years. There will be transitional relief for those people who currently benefit from non Dom status. All existing non Dom's should ensure they take advice to understand the new rules and benefit from the transitional relief.
Further Reading
