The Spring Budget 2024

The highlights: proved to be slim pickings for small business owners, something we have got accustomed to over the past few statements.

VAT registration

The VAT registration limit was raised from £85,000 to £90,000. So, from 1st April 2024 you now only have to be VAT registered after you exceed £90,000 of taxable sales in a 12-month period. Will this be massively impactful? Perhaps not, but it will help those businesses that like to keep just under the limit.

‘Full expensing’ deduction for leased assets

The Chancellor announced an intention to include full expensing tax relief on leased assets. The relief is intended to enable businesses to be more efficient by leasing assets to nurture productivity by getting the newest, cleanest and most efficient plant and machinery into the hands of business owners. This won’t make a lot of difference to most owner managed businesses, unless Annual Investment Allowance (AIA) is discontinued, or the allowance is greatly reduced.

Furnished holiday let rules

Furnished holiday let (FHL) properties were treated as businesses and had their own rules, these are being abolished from April 2025. If you currently have a holiday let, you might qualify for tax advantageous ‘FHL’ rules. You’ll get less tax relief now, and be treated like any other rental business.

Landlords who used the furnished holiday lets regime can deduct the full cost of their mortgage interest payments from their rental income, are entitled to capital allowances on the furniture, pay lower capital gains tax (CGT) when they sell, are entitled to CGT rollover relief etc. All to be discontinued.

National Insurance (NI) for the self- employed

Some good news for self-employed businesses. The National Insurance rate for this group will drop again from 9% to 6% from 6th April 2024. This is partially old news, as a 1% reduction was already announced in the Autumn Statement.

The government were already planning to abolish ‘Class 2’ national insurance as well. Class 2 is a small secondary national insurance paid by self-employed people. As the Gov website Autumn Budget statement explained:

“From 6 April 2024, self-employed people with profits above £12,570 will no longer be required to pay Class 2 NICs, but will continue to receive access to contributory benefits including the State Pension.”

National Insurance (NI) for the employed

National Insurance was reduced for the employed again. Last autumn, National Insurance for workers was cut from 12% to 10%. In a further reduction, from 6th April 2024 NI is cut from 10% to 8%. The main rate of employer National Insurance remains at 13.8% unchanged for 2024/25.

For limited company business owners this is unlikely to make much difference, as most will continue to pay themselves in dividends.
For any paid team members within the business, this good news.

Child Benefit

Child benefit is paid to one parent or guardian of any child aged under 16. It’s a major benefit as it includes:

An allowance for each child paid every 4 weeks
You get National Insurance credits for your State Pension
A National Insurance number for your child when they turn 16

The Child Benefit ‘limit’ has been raised and tweaked. Currently:

If one person in the household earns over £50,000 a year, you start to repay child benefit you receive.
As soon as one person in the household earns over £60,000 a year, it’s repaid in full.
The system was that you could have two people earning £49,999 in the same household and not repay anything. The Chancellor announced they are changing the limit to a ‘household income system’ by April 2026, but the exact details of how this will work are not known yet.

In the meantime, the government are also raising the threshold when repayments start. From April 2024 this rises to £60,000 per year, and the benefit is only entirely lost when earning over £80,000 per year. This is a very welcome change for many families.

Personal allowances

As previously announced, Personal tax thresholds – ie personal allowance, basic and higher-rate thresholds for income tax remain frozen until April 2028 at the current level of £12,570 and £50,270. The additional rate threshold was reduced from £150,000 to £125,140 from 6 April 2023.
Where annual income exceeds £100,000, personal allowance is lost at a rate of £1 for every £2 of income above £100,000. This is the threshold where the entire personal allowance is lost.

Capital Gains Tax

To support the housing market, Capital Gains Tax (CGT) on residential property has been reduced. This means that when you sell a residential property, the maximum rate of tax you will be charged on any gain you make is down from 28% to 24%.
As previously announced, the annual exemption amount for Capital Gains Tax for individuals will reduce from £6,000 to £3,000 from April 2024.

New British ISA investment allowance

The government has announced the introduction of the UK ISA. This will have a new ISA allowance of £5,000 in addition to the existing annual ISA allowance of £20,000 and will provide a new tax-free savings opportunity for people to invest in the UK. This will be introduced after a consultation which will run from 6 March 2024 to 6 June 2024.

Stamp Duty Land Tax (SDLT) relief for multiple dwellings to be abolished

Purchasers of residential property in England and Northern Ireland who acquire more than one dwelling in a single transaction or linked transactions will not be able to obtain Multiple Dwellings Relief (MDR) from 1 June 2024. MDR is a bulk purchase relief in Stamp Duty Land Tax (SDLT). The rate of tax is normally determined by the total consideration given for land. MDR is available to any purchaser buying 2 or more dwellings in a single transaction, or linked transactions, and allows the purchaser to calculate the tax based on the average value of the dwellings purchased as opposed to their aggregate value.

Recovery loan scheme

The third iteration of the Recovery Loan Scheme – which was due to end in June 2024 – will be extended and renamed as the Growth Guarantee Scheme. The terms of the scheme will remain unchanged, ensuring continuity and consistency for lenders and the business community and will provide a 70% guarantee to participating lenders on finance of up to £2m offered to smaller businesses.

Additional resources for HMRC

The government is continuing to tackle tax non-compliance by increasing HMRC’s capacity to collect tax debts. The government is introducing measures to clamp down on promoters of tax avoidance, and wants to further to strengthen taxpayer protections, making it harder for rogue advisors to provide tax advice that could cause harm. The government is consulting both on options to strengthen the regulatory framework, and on requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf.

Other announcements, which won’t interest most business owners

For those looking to run a film studio, there are extra tax credits and business rate reliefs.
For museums, galleries, theatres, etc., there are permanent extensions to the previous tax reliefs.
The government are consulting on Crypto-Assets, again.
HMRC has published a new opinion on training costs for sole traders and the self-employed, a small improvement.
Non-dom status to be replaced by new residence based system
This is a basic general guide of changes and announcements, so should not be used as a definitive guide as a basis for financial decisions, because individual circumstances may vary. You should get specific advice from us before making any decisions.

To find out more, why not contact us or book a meeting?