The 2024 Spring Budget presented by Chancellor Jeremy Hunt is a pivotal moment for the economy. As the nation begins to turn a corner following a period of economic uncertainty.
Let’s take a closer look at the key changes and initiatives announced by the Chancellor:
Personal Changes
The headline budget announcements affecting everyday people are the national insurance cut, capital gains tax reduction, and improvements to the Household Support Fund.
Further National insurance cuts will save some people up to £650 a year combined with announcements from the previous Autumn Statement. The abolishment of the non-dom regime is expected to raise £2.7 billion a year by 2028/29, ensuring a fairer tax system for all.
Another important announcement is the Child Benefit threshold which will benefit approximately half a million working families. Moreover, an all-new British ISA is set to encourage tax-free investment in UK equities.
Here’s a summary of the budget’s impact on individuals across the UK:
- National Insurance cut by 2p in April, from 10% to 8%.
- Abolishment of non-dom status.
- High Income Child Benefit Charge threshold raised from £50,000 to £60,000.
- Introduction of British ISA, allowing extra £5,000 investments in UK equities tax-free.
- Reduction of higher capital gains tax rate on property from 28% to 24%.
- Repayment period doubled to 24 months for new budgeting advance loans for low-income people.
- £90 charge for obtaining a Debt Relief Order abolished.
- Household Support Fund kept at the current level for six months.
- 5p cut to fuel duty to continue for 12 months.
Business Changes
For businesses, one of the key changes is an increase in the VAT threshold to £90,000.
This will primarily benefit small businesses by reducing their administrative and financial burden.
However, the surprise abolishment of the Furnished Holiday Lettings (FHL) relief, projected to raise £245 million per year, may impact businesses in the tourism sector.
The extension of the fuel duty cut and the Recovery Loan Scheme will provide continued support for businesses navigating the challenging economic landscape.
Here’s a summary of the budget’s key business impacts:
- VAT registration threshold increased from £85,000 to £90,000.
- Furnished Holiday Lettings (FHL) relief abolished from April 2025.
- Corporation Tax to rise from 19% to 25% for companies with profits over £250,000.
- Fuel duty cut extended for another 12 months.
- Extension and renaming of the Recovery Loan Scheme to the “Growth Guarantee Scheme.”
- Full expensing made permanent for qualifying plant and machinery investments.
- Investment zones to launch in the North of England and the Midlands.
- Pension reforms to unlock up to £75 billion of financing for high-growth firms by 2030.
Industry-Specific Support
The government also showed commitment to making the UK a global leader in key industries such as the creative industries, manufacturing, green industries, and AI:
- Creative industries: Over £1 billion in additional tax relief announced over five years.
- Manufacturing: Benefiting from the £4.5 billion Autumn Statement funding package.
- Green industries: Additional £120 million allocated to the Green Industries Growth Accelerator.
- Digital and AI: Plans to ensure access to public computing facilities and support SME AI skill development.
- Life sciences: £520 million Autumn Statement manufacturing funding to move forward.
Summary
As ever, the budget’s plans are subject to change and modification, particularly as we head towards an imminent general election.
At Hugh Davies & Co, we understand the importance of staying informed about the latest budget changes and their potential impact on your personal and business finances.
Our team of experienced accountants is ready to provide expert advice and guidance tailored to your specific needs.
Please don’t hesitate to contact us for a consultation to discuss how these budget changes may affect you and your business.