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UK Budget 2024

paperwork and calculator referring to the UK Budget 2024

The UK Budget 2024, presented by the chancellor, unveiled a multitude of changes impacting various sectors. From tax cuts to tax hikes, the new budget aims to balance the country’s economic landscape while addressing significant societal issues. This article will delve into the key components, exploring their implications for individuals and businesses alike.

 

1. National Insurance Contributions

Starting April 2024, the National Insurance contributions for employees will be cut from 10% to 8%, benefiting approximately 27 million workers. This change could result in annual savings of up to £450. Similarly, self-employed individuals will also see a 2% reduction in their National Insurance rates.

It’s important to note that the savings generated from the reduction in National Insurance contributions might vary based on the individual’s income and employment status.

 

2. Property Capital Gains Tax

The higher rate of the property capital gains tax will be lowered from 28% to 24%. This change may promote investments in property, as the reduced tax burden could lead to higher net returns for investors.

 

3. Changes to Non-Dom Tax Status

The non-dom tax status, which allowed foreign nationals living in the UK but domiciled overseas to avoid paying UK tax on their overseas income or capital gains, has been abolished. A simpler, residency-based system will replace this in 2025.

 

4. Stamp Duty Relief

The Stamp Duty Relief for individuals who purchase more than one residential property in a single transaction, also known as Multiple Dwellings Relief, has been abolished. This change may affect property investors who often rely on this relief to minimize their tax liabilities.

 

5. Furnished Holiday Lettings Regime

The furnished holiday lettings regime, which was criticized for contributing to the shortage of long-term rental properties for local people, has been abolished.

 

6. Air Passenger Duty

Air passenger duty will be increased for non-economy class passengers. This change could affect the cost of business and first-class tickets, making air travel more expensive for those passengers.

 

7. Energy Profits Levy

The energy profits levy, a windfall tax on UK-produced oil and gas, has been extended to 2029. This extension underscores the government’s commitment to ensuring that energy companies contribute their fair share to the national treasury.

 

8. High-Income Child Benefit Charge

Changes have also been made to the High Income Child Benefit Charge. Previously, if a parent earned above £50,000 a year, the benefit payments would be affected. Now, the system will be based on household income, and the threshold will rise to £60,000 from April. The maximum limit where the benefit is withdrawn has been raised to £80,000.

 

9. Household Support Fund

The household support fund has been extended for another six months. This measure aims to provide additional financial support to households struggling due to the economic impact of the pandemic.

 

10. Debt Relief Order Charge

The £90 charge to obtain a debt relief order has been abolished, providing some relief to individuals struggling with debt.

 

11. Budgeting Advance Loans

The repayment periods for new budgeting advance loans, designed to help people on low incomes, will be increased from 12 to 24 months. This change may ease the burden of repayment for many borrowers.

 

12. New British ISA

A new British ISA has been introduced, allowing an annual investment of £5,000 into UK businesses. This ISA includes all the tax advantages of other ISAs and will be in addition to existing allowances.

 

13. British Savings Bond

To encourage saving, a new British Savings Bond will be offered through NSNI, providing a guaranteed rate fixed for three years.

 

14. Vaping Liquids and Tobacco Duty

Duty will be introduced on vaping liquids for the first time in October 2026, along with a one-off increase in tobacco duty.

 

15. Alcohol Duty Freeze

The freeze on alcohol duty has been extended until February 2025, providing some relief to businesses in the hospitality sector and consumers alike.

 

16. Fuel Duty

There will be no change to the fuel duty, with the 5p cut announced in March 2022 remaining in place.

 

17. Business Expensing and VAT Registration Threshold

Full expensing for businesses will apply to leased assets in the future when affordable. The VAT registration threshold for businesses has also been increased from £85,000 to £90,000.

 

18. Business Rates for Film Studios

Eligible film studios in England will secure 40% relief on their gross business rates until 2034. Tax reliefs have been made permanent at 45% for touring and orchestral productions, and 40% for non-touring productions.

 

19. Predictions by the Office for Budget Responsibility

The Office for Budget Responsibility has made several predictions for the coming years, including UK GDP growth, Treasury borrowing, and inflation rates. The NHS is also set to receive an additional £2.5bn this year to tackle issues including waiting lists.

 

20. Public Sector Spending

The planned growth in day-to-day public sector spending is to be maintained at 1% in real terms. This includes funding for the NHS productivity plan “in full” to boost digital transformation.

The UK Budget 2024 introduces numerous changes that will impact individuals and businesses across the board. It’s essential for everyone to understand these changes to plan their finances effectively.

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