Budget box

Budget blog 06 March 2024

06 March 2024

Annual Budget announcements are often not exciting, or indeed interesting to some. Many readers will be aware that the Chancellor, Jeremy Hunt MP, and the current government have overseen a significant rise in taxes over the last few years through the freezing of personal allowances. The 'giveaway' measures announced both at the very start of the year (NIC rate reduction from early January 2024), and in this March 2024 announcement help ease the tax pressure, rather than offering real tax cuts.

This year's Budget is different of course because it is an election year, and the question will be if the announcements today are enough to help with any voting decisions at the election, which is widely expected to take place in the autumn, although the latest it can be held is late January 2025. I am sure rumours from Westminster, along with counter-rumours, will fly over the coming period, and one thought is that the Chancellor will have one more 'Budget' before going to the polls. If this is the case, then the 'giveaways' might have to be spread more thinly to offer two bites of the fiscal cherry.

We have looked at the announcements today and have picked out some of the headlines for readers to consider:

  • A second 2% National Insurance reduction for employees and the self-employed, estimated to be worth around £450 pa for an individual earning £35,000 pa gross and £750 pa for someone earning approximately £50,000 pa.
  • A new UK ISA (dubbed the 'British ISA' or 'BRISA') to encourage investment in UK equities. This will provide an additional £5,000 ISA allowance on top of the standard allowance of £20,000 in a tax year. This new measure is in a consultation process.
  • Increase in the high-income child benefit charge threshold from £50,000 gross to £60,000 gross from April 2024, with the upper limit of the taper increasing to £80,000 (halving the rate at which the charge is applied). Consultation on moving to a household income basis from April 2026.
  • Reduction in the higher rate of capital gains tax (CGT) on second properties from 28% to 24%.
  • Abolition of the furnished holiday lettings tax regime.
  • VAT threshold raised from £85,000 to £90,000
  • Government sale of NatWest shareholdings in the summer, subject to market conditions.
  • Changes to the taxation status of non-UK domiciled individuals (non-doms) from April 2025, to be replaced with a residency-based system. From April 2025, new arrivals to the UK will not be required to pay tax on foreign income and gains for the first four years of UK residency. After that point, those who remain in the UK will pay the same tax as other UK residents. Transitional arrangements will be put in place for those under the current regime.
  • Extension of fuel duty discount for another year
  • No additional changes to the pension rules, noting the change in the HMRC Lifetime Allowance and its effective abolition in the new tax year.

Chapters Financial is producing a tax card for the new tax year ahead, 2024/2025, with these updates included. If you would like a copy, then please let us know.

Our website visitors will know that Easter falls early this year, and this may reduce the time left to make pension and ISA contributions. Please let us know if you wish to achieve these in good time.

No individual advice is provided during the course of this blog. I and the team look forward to helping you with your financial planning at the end of and beginning of the tax years.

Keith Churchouse FPFS
CFP Chartered FCSI
Chartered Financial Planner

Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899

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