The coming of spring can mean only one thing – the Chancellor’s latest Budget announcement.
Mr Hunt did indeed deliver his Spring Budget on the 6th of March, notable outlining tax cuts to National Insurance Contributions (NICs) which will bring modest benefit to a majority of UK employees; as well as some planned tax rises.
Highlights from the budget update included a two percentage point reduction, from 10% to 8%, in the main rates of NICs for employees. It was the second such cut in six months. For the self-employed a similar fall in rates, from 8 to 6%, was announced.
Notable tax rises include the abolishment of non-dom tax status and a planned levy on vaping liquid.
Other highlights include:
· The high-income child benefit charge (HICBC) will be reformed. The threshold increases to £60,000 from April 2024, while the rate at which the charge is levied will be halved, so that child benefit will not be fully withdrawn until an individual’s income reaches £80,000.
· For residential property disposals, the higher rate of capital gains tax (CGT) will be cut from 28% to 24% from 6 April 2024.
· A new UK individual savings account (ISA) will create an additional £5,000 allowance on top of the current £20,000 ISA limit.
· The furnished holiday letting tax regime will be abolished from 6 April 2025.
· From 1 April 2024, the VAT registration and de-registration levels will be increased to £90,000 and £88,000 respectively.
· The non-domicile rules will be replaced with a new regime based on residence from April 2025.
· Multiple dwelling relief within the stamp duty land tax (SDLT) regime for England and Northern Ireland will be abolished from 1 June 2024.
· Alcohol and fuel duties are frozen.
How could the new Budget impact savers and investors?
Lindsay James, investment strategist at Quilter Investors, comments:
“The latest budget from the Chancellor has revealed some positive adjustments to the economic outlook, as well as some targeted tax cuts aimed at boosting the flagging popularity of the Conservative party. However, the overall picture remains one of fiscal restraint and uncertainty, with productivity gains rather than cold hard cash expected to solve the pressures on public services, given little room for manoeuvre in the face of ongoing debt and spending pressures.
“The Office for Budget Responsibility (OBR) has once again revised its inflation forecasts, with inflation now expected to fall below 2% in the coming months, reflecting lower energy prices and subdued demand. This has lowered the government's interest payments on its debt, as well as reducing the cost of some benefits that are linked to inflation.
“The Chancellor has used this windfall to announce some tax cuts, mainly focused on slashing national insurance. He has also maintained the freeze on fuel duty and alcohol duty and made changes to the Child Benefit system which will ultimately see payments expanded.
“However, these tax cuts must be balanced with the £17bn of tax rises that have already been announced for the next parliament, which include freezing the income tax thresholds in real terms and the expiration of other short-term tax breaks.
“Despite a difficult backdrop for economic growth, there remain reasons to be optimistic. There are early signs of growth beginning to pick up, with business and consumer confidence having improved in recent months. Meanwhile, interest rates are still expected to fall in the coming year, oiling the cogs of the economy just as innovation in sectors such as AI and life sciences has taken a giant leap forward.”
Quote edited for clarity & length.
As ever the Budget publications contained a wide range of detailed proposals and much to digest.
If you would like to receive our complimentary Budget Summary which highlights the key aspects likely to affect you, please email contact@financialopts.co.uk.
Tax treatment varies according to individual circumstances and is subject to change.
The value of pensions and investments can fall as well as rise and you can get back less than you invested.
This blog is for general information only. It is important to consult with your adviser before making or foregoing any changes based on this content.
Approver Quilter Financial Services Ltd & Quilter Mortgage Planning Ltd 20.03.2024.