As economic challenges grew and with a general election on the horizon, many eagerly awaited Chancellor Jeremy Hunt’s Spring Budget on 6 March.
The Chancellor’s Budget aimed to manage finances effectively and spark voter interest, setting out a plan to drive long-term growth. In this blog, we break down the key points from his speech and look at how they might affect you and your business.
National Insurance Contributions (NICs)
A major highlight was the additional reduction in NICs for both employees and the self-employed. Starting in April, employees saw a 2% drop in their primary rate, from 10% to 8%. Following the January cut, this will save the typical employee earning £35,400 over £900 a year.
Self-employed individuals also had reason to celebrate. The main rate of Class 4 NICs decreased from 8% to 6%. With the recent removal of the Class 2 NICs requirement, an average self-employed person earning £28,000 could see savings of more than £650 annually.
VAT registration threshold
On 1 April 2024, the VAT registration threshold increased from £85,000 to £90,000 to reduce the administrative burden on SMEs. This change benefits around 28,000 SMEs, potentially exempting many from VAT complexities and encouraging investment and growth.
Furnished Holiday Lettings (FHL) Relief
The Government also announced plans to phase out FHL relief by April 2025. This change is designed to tackle housing shortages in key tourist areas by shifting the focus from short-term holiday lets to long-term rentals.
Implications for the property market
The end of FHL relief is expected to shift the property market towards long-term rentals, especially in areas popular with short-term renters. Additionally, the reduction of the higher rate of capital gains tax (CGT) on residential properties from 28% to 24%, which started in April 2024 should invigorate the market.
Spring Budget support for businesses
While more subdued than the Autumn Statement, the Spring Budget still offered several supportive measures for SMEs, high-growth companies, and important sectors such as manufacturing, the creative industries, and life sciences. This includes the introduction of the Growth Guarantee Scheme, showing ongoing support for the business community.
Modernising the Non-dom tax regime
The Chancellor proposed modernising the non-dom tax regime in the Spring Budget, exempting new UK residents from tax on foreign income for their first four years, aiming to generate £2.7 billion a year by 2028/29 and keeping the UK appealing for international investors.
Savings and Investments
The Spring Budget introduced initiatives to enhance savings and investments. A new UK ISA permits an additional £5,000 annual tax-free investment in UK equities. Also, the launch of British Savings Bonds, offering a guaranteed rate for three years, aims to provide savers with more attractive returns.
The bottom line
The Spring Budget outlined a Government strategy focused on addressing current economic challenges. By reducing the tax burden on individuals and businesses, reforming the non-dom regime, and boosting savings and investments, the budget hoped to create a more vibrant, fair, and prosperous economy.
It’s vital to stay informed about these changes and adapt your financial strategies accordingly. At Stapletons, we’re ready to help you navigate these updates. Whether you need to understand how these changes impact your finances or are planning your next steps, we’re just a conversation away.
Contact us to discuss how the Spring Budget updates can benefit you.
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