Budget 2024 Highlights for Businesses: What You Need to Know
The 2024 Spring Budget, led by Jeremy Hunt, brought significant changes for businesses across the UK. Here are the highlights you need to know:
- National Insurance Rate Cut: Jeremy Hunt announced a 2p cut to the national insurance rate for both employees and the self-employed, reflecting the government’s commitment to supporting businesses.
- Economic Resilience: Despite challenges like the financial crisis, pandemic, and energy price hikes due to conflicts in Europe, the UK economy has shown resilience. Hunt reassured the nation that inflation is expected to drop below the government’s 2% target sooner than anticipated.
- Projected Economic Growth: Anticipated growth of 0.8% for the national economy in 2024 is expected to rise to 1.9% next year, peaking at 2% in 2026. However, growth is forecasted to slow to 1.8% in 2027 and 1.7% in 2028.
- Boost in Day-to-Day Spending: The government plans to increase day-to-day spending by 1% in real terms over the next five years, aiming to bolster various sectors and stimulate economic activity.
- Support for SMEs: SMEs will benefit from the VAT registration threshold rise to £90,000, effective from April. Additionally, the extension of the government loan scheme for small businesses until March 2026 provides further financial support.
- Tax Relief and Incentives: Businesses investing in new technology and equipment can take advantage of the extension of full expensing to leased assets. Furthermore, tax credits for independent UK films and permanent tax reliefs for touring and orchestral productions were announced.
- Tax Allowances and Changes: A consultation will be conducted for a proposed £5,000 UK ISA tax allowance for savers investing in ‘UK-focused’ shares. Property owners will see a reduction in the higher rate of capital gains tax on residential sales from 28% to 24%.
- Addressing the Energy Crisis: To tackle the ongoing energy crisis, the chancellor froze fuel duty for the coming year and extended the windfall tax on oil and gas firms’ profits to 2029. A significant allocation of £120 million was made for the green energy sector, with a focus on offshore wind farms, carbon capture, and nuclear projects.
2024 Spring Budget Reforms: Key Updates for Taxation and Property Sectors
The 2024 Spring Budget introduced several significant changes affecting taxation and property sectors. Here’s a breakdown of the key updates:
- Stamp Duty Land Tax (SDLT): Multiple dwellings relief (MDR) from SDLT will be abolished, effective from 1 June 2024. This relief, originally aimed at supporting bulk purchases for rental stock, has been exploited in purchasing larger residential properties with ancillary cottages or annexes.
- Capital Gains Tax (CGT): The top rate of CGT on sales of residential properties will decrease from 28% to 24%. However, there’s no mention of changes to the CGT regime for carried interest held by fund managers.
- National Insurance Contributions (NICs): From 6 April 2024, the main rate of Class 1 employee NICs will reduce from 10% to 8%, and Class 4 self-employed NICs will decrease from 9% to 6%. Although welcomed, frozen income tax bands may offset these reductions for some individuals.
- Transfer of Assets Abroad (ToAA) Rules: Legislation will be introduced to prevent individuals from using companies to bypass anti-avoidance rules, effective from 6 April 2024, closing loopholes identified in the ToAA regime.
- Agricultural Property Relief (APR): APR will be extended from 6 April 2025 to include land managed under environmental agreements with certain public bodies.
- Tax Transparency: Measures to enhance transparency around cryptocurrency investments will be extended, promoting tax recovery and compliance.
- VAT Thresholds: The VAT compulsory registration threshold will rise to £90,000, and the deregistration threshold to £88,000 from 1 April 2024, providing relief to small businesses.
- Furnished Holiday Lets (FHL): The FHL tax regime, offering tax benefits to some landlords letting short-term holiday properties, will be abolished from 6 April 2025.
We hope this quick snapshot has been helpful. Please note that the information provided is intended for general informational purposes only and should not be construed as professional advice. Tax regulations and policies may vary, and it is recommended to consult with a professional or visit the HMRC website for specific guidance tailored to your individual circumstances.