Chancellor announces range of tax changes in 2024 Budget

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Chancellor of the Exchequer, Jeremy Hunt, presented his 2024 Budget to the House of Commons on Wednesday 6th March.

Addressing the fellow MPs, the Chancellor outlined improvements made in the economy since taking office in 2022, including a slowing in the rate of inflation from 11% to 4%, but recognised the need for higher interest rates and slower economic growth to bring inflation back down to its 2% target rate.

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Jeremy Hunt described his plans as a “Budget for Long Term Growth” that would deliver investment, job growth, improved public services and lower taxes.

Key highlights of the measures announced in the Chancellor’s Budget are detailed below:

Personal tax:

Following January’s cut to the rate of Employee National Insurance Contributions (NICs) to 10% announced in the Autumn Statement, Jeremy Hunt has announced a second cut to 8% will take effect from 6th April. For self-employed individuals paying Class 4 NICs, the rate will fall to 6%. Employer NICs paid by businesses remain unchanged.

The personal allowance and basic tax thresholds also remain frozen, and are set to stay at their current levels until 2027/28. Higher-earners with children, however, will benefit from reforms to the tapering off of child benefits, which will now apply to those on incomes of over £60,000, with benefits tapering at half their current rate, meaning only those with incomes above £80,000 will lose out entirely.

A new £5,000 ISA allowance is also to be introduced, allowing savers to invest £5,000 per year into UK businesses on top of their existing £20,000 tax-free savings allowance. Details of the UK ISA are still be drawn up with the financial services sector.

Controversial non-UK domicile tax rules are also to be changed from April 2025, in favour of a new residence-based scheme, and will give a four-year tax break on foreign income on new UK tax residents.

Business tax:

Small businesses have been successful in lobbying the Chancellor for an increase in the VAT registration threshold, which will rise form £85,000 to £90,000; the deregistration threshold will also rise accordingly to £88,000.

The Chancellor has also announced targeted tax relief for the creative industries. The government will introduce a new UK Independent Film Tax Credit at a rate of 53% for films with budgets under £15 million, as well as an increase in relief of visual effects costs, while film studios will benefit from business rates relief of 40%.

Alcohol producers will also benefit from a continued freeze on alcohol duty, through to the 1st February 2025.

Property:

The rates of Capital Gains Tax on the sale of residential properties will fall from 28% to 25% from 6th April, with the rate frozen at 18% for basic rate taxpayers.

In response to rising numbers of properties being converted to furnished holiday lets (FHLs), the Chancellor has announced an end to preferential taxation of these types of homes over conventional lettings. From 6th April 2024, all FHLs will come under the same rules as other residential properties.

Multiple Dwellings Relief on stamp duty for purchases of multiple properties is also to be abolished for completions on or after 1st June 2024 (unless formally exchanged before 6th March 2024). Where purchases are for six or more dwellings or includes non-residential units, non-residential relief rates will continue to apply.

Energy and the environment:

In response to continued high profits of businesses in the sector, the Chancellor has announced a continuation of the ‘Windfall Tax’ on energy companies through to 2029.

Air passenger duty is set to increase on business class tickets, while fuel prices at the pump for drivers will continue to benefit from a freeze in fuel duty.

Jeremy Hunt also reconfirmed a commitment made earlier this week to invest a further £120 million into the Green Industries Growth Accelerator to support renewable energy technology development and roll-out. The government will also purchase to nuclear power stations (one in North Wales, and one in Gloucestershire), with an ambition for nuclear energy to deliver a quarter of the UK’s electricity.

Local government:

In response to widespread calls from local authorities for it to continue, the Chancellor has extended the Household Support Fund for local council’s to continue providing cost-of-living support for local residents.

The North East will also benefit from a new Trailblazer devolution deal, one year on from the announced expansion of devolution for Greater Manchester and the West Midlands.

Other:

• Tobacco duty will increase to £2 per 100 cigarettes, and vaping products will be subject to a new tax based on their nicotine content from October 2026.
• NHS budget set to increase to £2.5 billion, with a further £3.4 billion by the end of the decade promised to improve productivity