Chancellor Jeremy Hunt delivered what is expected to be his final budget speech before a general election later this year. A much-anticipated NIC reduction was announced, alongside changes to the VAT and child benefit thresholds.
We detail the key changes business owners need to consider, and look forward to providing bespoke advice to our clients to take advantage of any opportunities, and mitigate any downsides that have arisen.
National insurance
For employees, the main rate of national insurance will fall from 10% to 8% from 6th April 2024. The average worker earning £35,400 would be better off by around £900 per year.
For the self-employed, the main rate of national insurance will fall from 9% to 6% from the same date; a larger reduction than what was previously announced. The average sole trader making £28,000 per year would benefit by around £650 per year.
VAT
The annual taxable turnover threshold will increase from £85,000 to £90,000. Businesses will be able to turnover up to this level, before being obliged to register.
The de-registration threshold will increase from £83,000 to £88,000. Businesses under the threshold will be able to voluntarily de-register from VAT.
Child benefit
The starting threshold for the High Income Child Benefit Charge will rise from £50,000 to £60,000 from the 2024/25 tax year.
The charge will be tapered at a rate of 1% repayable for every £200 earned over £60,000, until £80,000, when it is repayable in full.
Previously, it was repayable at a rate of 1% for each £100 earned over £50,000, being fully repayable at £60,000.
Capital gains
The higher Capital Gains Tax rate on non-exempt residential property will fall from 28% to 24%. This will benefit investors, landlords and second-home owners on the gains they make on sale of their properties.
Abolition of furnished holiday lettings regime
The advantage for landlords of furnished holidays lets is to be removed from April 2025. Details are yet to be announced, but advantages currently enjoyed include: fully deductible interest, capital allowances, capital gains relief, pension benefits and flexibility around splitting income.
Training costs for sole traders and self-employed
Clarification came that costs to acquire new skills and knowledge relating to a sole trader’s existing business will be allowable expenses, as well ancillary skills to a person’s business, such as bookkeeping or digital skills.
Savings
A new UK ISA will allow individuals to save another £5,000 in UK equities, alongside their existing ISA allowances.
British Savings Bonds will be launched, through NS&I, offering a guaranteed 3-year interest rate.
Next steps
Get in touch with us for a tailored analysis on the effects of the budget for you and your business.