The Chancellor announced a number of measures in the Spring Budget that impacts our personal and business lives, including the well advertised cut in National Insurance and raising the VAT threshold.
Here’s our brief breakdown of the key points from the Spring Budget.
1. National Insurance Cuts
The government plans to reduce National Insurance contributions by 2p for both employed and self-employed individuals. This will result in potential savings across different income brackets.
For example, individuals earning £30,000 per year could save approximately £500 annually, while those earning £50,000 per year could save around £700. These cuts aim to stimulate economic growth, increase disposable income, and benefit the overall workforce.
2. Changes to the Taxation of Non-Doms
Starting in 2025, the government will implement reforms to the taxation of non-domiciled individuals. One significant change is the abolition of the current remittance basis of taxation. Instead, non-doms will be subject to the new ‘arising’ basis of taxation.
This reform aims to simplify the tax system and ensure fair contributions from all residents in the UK, potentially impacting international residents who have previously utilised the remittance basis.
3. Big Shake-Up for Long-Term Residents
With the introduction of new rules for long-term residents, those transitioning to the ‘arising’ basis of taxation will face a flat rate and restrictions on foreign income. This may impact individuals who have previously benefited from more favourable tax treatment.
Additionally, the changes will affect UK non-doms and offshore trust settlers, requiring them to reassess their tax strategies and evaluate the potential impact on their financial plans.
4. High Income Child Benefit Change
The budget includes changes to the High Income Child Benefit Charge (HICBC) that will benefit families. The income threshold at which the charge applies will increase, ensuring that more families receive child benefit without the potential for a reduced payment.
The government also plans to consider household income for child benefit assessment by 2026. Individuals will need to carefully manage their earnings to optimise their eligibility for child benefit.
5. Reduction in Rate of Residential Property Capital Gains Tax
The budget announces a reduction in Capital Gains Tax (CGT) rates for gains made from residential property. This adjustment means that property owners will pay a lower rate of CGT when selling their homes.
However, it’s vital to note that revisions to private residence relief may impact the availability of CGT exemptions for certain property transactions. Property owners should seek professional advice to navigate these changes effectively.
6. Furnished Holiday Letting Regime Abolished
The budget includes the abolition of the furnished holiday letting (FHL) regime, which previously provided favourable tax treatment for property owners operating holiday rentals.
This change is part of the government’s effort to create a level playing field in the property sector. Stakeholders in the property market should be aware of the implications and consider revising their strategies to adapt to this new tax landscape.
7. Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief Axed
The budget removes the Stamp Duty Land Tax (SDLT) multiple dwellings relief, impacting property transactions and investors. Previously, this relief allowed buyers to pay less SDLT when purchasing multiple residential properties.
The removal of this relief is likely to influence investment decisions and may have implications for the property market as a whole. It’s crucial for individuals and investors to understand the new SDLT requirements and factor them into their calculations.
8. Income Tax, Corporation Tax, and Capital Gains Tax Unchanged
In a stable move, the budget maintains Income Tax, Corporation Tax, and Capital Gains Tax rates. This decision provides certainty for taxpayers and businesses, allowing them to plan their finances without any immediate changes in tax obligations.
It’s important to remain attentive to potential future developments as governments continuously review tax policies.
That’s it for now, please don’t hesitate to get in touch if you have any questions or require further assistance. We are always happy to hear from you.
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