Overview
On March 6, 2024, Chancellor Jeremy Hunt presented the Spring Budget to Parliament. With a general election now set for 4th July 2024, this Budget aimed to restore voter confidence amid economic challenges, including a recession and downgraded forecasts from the Office for Budget Responsibility (OBR). Key highlights included cuts in National Insurance Contributions (NICs), changes in VAT thresholds, and adjustments to the high-income child benefit charge.
Income Tax
Personal Allowance
The tax-free personal allowance remains at £12,570 for the 2024/25 tax year. This allowance starts to phase out for incomes over £100,000 and is completely withdrawn for incomes exceeding £125,140.
Income Tax Rates and Allowances
The income tax rates and thresholds for 2024/25 are unchanged from 2023/24. After deducting the personal allowance, income is taxed as follows:
- Basic Rate: 20% on income from £1 to £37,700
- Higher Rate: 40% on income from £37,701 to £125,140
- Additional Rate: 45% on income over £125,140
Scottish Taxpayers
For those living in Scotland, income tax bands differ:
- Starter Rate: 19% on income up to £2,306
- Basic Rate: 20% on income from £2,307 to £13,991
- Intermediate Rate: 21% on income from £13,992 to £31,092
- Higher Rate: 42% on income from £31,093 to £62,430
- Top Rate: 48% on income over £125,140
Savings and Dividend Income
- The savings allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers.
- The dividend allowance will reduce to £500 in 2024/25 from £1,000 in 2023/24.
Employment Taxes
For Employees
From April 6, 2024, the main rate of Class 1 NICs will be reduced from 12% to 8% for earnings between £12,570 and £50,270, while the rate on earnings above £50,270 remains at 2%.
For Employers
Employer’s Class 1 NICs rate remains at 13.8% for wages above £9,100 annually, with an employment allowance of £5,000.
National Minimum Wage (NMW)
The minimum hourly rates effective from April 1, 2024, are:
- Age 23 and over: £11.44
- 21-22 year olds: £10.18
- 18-20 year olds: £8.60
- 16-17 year olds: £6.40
- Apprentices: £6.40
National Insurance for the Self-Employed
From April 6, 2024, Class 4 NICs main rate will decrease from 9% to 6%, and Class 2 NICs will be effectively abolished.
VAT
From April 1, 2024, the VAT registration threshold increases to £90,000, and the deregistration threshold rises to £88,000.
Corporate Taxes
Corporation Tax
The corporation tax rates for the financial year to March 31, 2025, are:
- Main Rate: 25%
- Small Profits Rate: 19%
- Marginal Relief Rate: 26.5%
Research & Development (R&D) Reliefs
A new R&D scheme will be introduced from April 1, 2024, merging the existing R&D Expenditure Credit (RDEC) and the SME schemes. Additionally, a new scheme for ‘R&D intensive SMEs’ will be launched.
Business Tax
Annual Investment Allowance (AIA)
Businesses can claim 100% tax relief on qualifying equipment purchases up to £1 million. Full expensing is available for companies on qualifying equipment.
Making Tax Digital (MTD)
Starting April 2026, businesses will need to keep digital records and submit quarterly summaries of income and expenses to HMRC using MTD-compatible software.
Capital Gains Tax (CGT)
Annual Exemption
The CGT annual exemption will decrease to £3,000 in 2024/25 from £6,000 in 2023/24.
Rates
- Basic Rate Taxpayers: 10%
- Higher Rate Taxpayers: 20%
- Residential Property (not private residence): 18% for basic rate taxpayers, 24% for higher rate taxpayers
Inheritance Tax
Rates and Thresholds
The inheritance tax rate remains at 40%, with the nil rate band at £325,000 and the residence nil rate band at £175,000.
Other Notable Changes
Furnished Holiday Lets (FHLs)
From April 6, 2025, FHLs will lose their enhanced tax reliefs and be taxed like other rental properties.
UK Residency and Domicile
The remittance basis of taxation will be abolished from April 6, 2025, replaced by a residence-based regime.
Conclusion
This summary highlights the key points from Budget 2024. For personalised advice and detailed analysis, please contact us.
Key Dates
| Date | What’s Due |
|---|---|
| 19 March | Employer PAYE & NIC deductions, and CIS return and tax, for the month to 5/3/24 |
| 1 April | Corporation tax payment for the year to 30/6/23 |
| 5 April | End of the 2023/24 tax year |
| 6 April | Start of the 2024/25 tax year |
| 19 April | Employer PAYE & NIC deductions, and CIS return and tax, for the month to 5/4/24 |
| 30 April | Annual Tax on Enveloped Dwellings (ATED) returns and payment for the chargeable period |
This information is accurate as of March 6, 2024. For the latest updates and personalised advice, please contact us directly.