Spring Budget 2024 Simplified: What It Means for You & Your Business
As a trusted companion in Barnsley’s financial landscape since the 1970s, we're all about breaking down complex finance talk into something you can understand and use.
With the Spring Budget 2024 announced by Chancellor Jeremy Hunt on 6th March, there's a lot to unpack.
This budget is particularly noteworthy as it's likely the last one before the next election. As you would expect from a pre-election budget, it focused heavily on the tax relief measures, including additional cuts to National Insurance Contributions (NICs) and a new savings bond.
Limited by financial constraints, the Chancellor couldn’t offer as many tax breaks as some backbench Conservatives would have liked.
Despite this, he achieved a few key political goals, including adopting a Labour policy to end the non-domicile tax rule that allowed some UK residents pay less tax on foreign income.
In this post, we'll give you a clear understanding of what's new and how it might affect your family or business, ensuring you're well-equipped to navigate the changes.
What’s Changing with Child Benefit?
The High Income Child Benefit Charge (HICBC), a tax that affects families earning above a certain amount, is changing to help more people.
Here’s what it means for you:
- Starting Next Financial Year (2024/25): If you're earning up to £60,000, you won't have to pay as much HICBC tax because the threshold is going up by £10,000.
Before, you'd start paying more HICBC tax if you earned over £50,000. Now, that starts at £60,000.
Plus, the HICBC tax rate is being cut in half until your income hits £80,000.
So, if you make between £60,000 and £80,000, you'll still pay some HICBC tax, but not as much as before.
- By April 2026: Right now, whether you need to pay the High Income Child Benefit Charge depends on how much you earn as an individual.
However, from April 2026, the income of your whole household will be considered.
It’s good news for your family if one partner has quite a high salary and the other has a very low income or doesn’t work at all. This is because your combined income could be less than £60,000.
However, if you’re both earning a moderate wage that currently falls below the new threshold of £60,000, your combined income could cause you to exceed this threshold. If you’re in this situation, you are likely to be worse off as a result of this change.
Paying Less National Insurance
Starting on 6th April 2024, there will be cuts to National Insurance Contributions (NICs), which is great news for both and self-employed people. Only those who don’t earn enough to pay National Insurance will be unaffected by this change.
Here's a simple breakdown:
- For Employees: If you work for someone else, the amount taken from your salary for National Insurance will reduce from 10% to 8%. This means you will get to keep more of your earnings each month.
- For Self-Employed People: If you work for yourself, your National Insurance rate will drop from 8% to 6%. This change will help lower your tax bill, leaving you more money to invest back into your business or for personal use.
Changes to Capital Gains Tax on Residential Properties
Starting in the tax year 2024/25, if you sell a house or flat that's not your main home, such as a rental property or a holiday cottage, the most Capital Gains Tax (CGT) you'll have to pay on the profit (the money you make from the sale) will be 24%.
This is a decrease from the current CGT higher rate of $28. This change will make it less costly to sell these types of properties.
The reduced tax rate could motivate landlords and those with holiday homes to consider selling sooner rather than later, especially if they're looking at much higher mortgage payments at the end of their fixed rate deal.
Similarly, those who own holiday cottages might want to sell before tax benefits are scrapped in April 2025.
A New Way to Save: The UK ISA
There’s also talk of a new type of savings account called the UK ISA, letting you save up to £5,000 more, on top of the usual £20,000 ISA limit. This is the first time that the ISA limit has changed since 2017/2018.
The catch is that your savings must be in UK shares or bonds. No timeline has been specified yet for this proposal, but it’s something to keep an eye on if you’re looking to save more.
We’re Here to Answer Your Finance Questions
At GBAC, we’re all about making finance simple and helping you and your business thrive. We know that every penny counts and every decision matters.
If you have any questions about how the Spring Budget 2024 might affect you, or would like advice on the best way to benefit from the new budget changes, get in touch with our knowledgeable and friendly team today.
You can give us a call on 01226 298 298 or send us a message via our online contact form for a swift response.