Summary of Spring Budget – 6th March 2024

By Ann Coleman

Trust and Estate Tax Accountant

The Chancellor, Jeremy Hunt, delivered his Spring Statement on Wednesday 6 March 2024 and I have summarised some of the major points below.

From 6 April 2024 the basic rate of income tax (20%) will be levied on taxable income to £37,700 and the threshold at which 40% income tax applies is £50,270 for those who are entitled to a full personal income tax allowance.

The basic income tax rate band is frozen at £37,700 until 6 April 2028 and National Insurance (NI) contributions upper earnings limit and upper profits limit will remain aligned to the higher rate threshold at £50,270 for these tax years as well. Again, from 6 April 2024 individuals will pay the additional rate income tax of 45% on income higher than £125,140. If you reside in either Scotland or Wales, please do check the local income tax rates.

The income tax personal allowance of £12,570 is fixed until April 2028. There is a reduction in the personal allowance for those with adjusted net income over £100,000. For those with income which exceeds £125,140 there is no personal allowance.

The tax on savings income (excluding that income included in the ISA savings wrapper), such as bank and building society interest, depends on the taxpayer’s marginal (highest) rate of income tax. Individuals taxed at the basic rate of income tax have an allowance of £1,000; higher rate taxpayers of £500 before they pay tax on this type of income. There is no allowance for additional rate taxpayers.

For tax on dividends, with effect from 6 April 2024 there is no tax charged on the first £500 and dividends received above this allowance are taxed at the following rates:

  • 8.75% for basic rate taxpayers
  • 33.75% for higher rate taxpayers
  • 39.35% for additional rate taxpayers

Class 1 employee NI contributions are being reduced from 10% to 8% from 6 April 2024. For the self-employed, in most cases there are 2 types of NI, Class 2 and Class 4. Class 2 NI is no longer payable and Class 4 NI will be reduced from 9% to 6% from 6 April 2024.

The furnished holiday lettings tax regime will be abolished with effect from 6 April 2025 and draft legislation is to be published (which will include anti-forestalling measures) which will apply from 6 March 2024.

Short-term holiday lets and longer-term residential lets with effect from 6 April 2025 will be treated as the same for tax purposes ‘

With effect from 6 April 2024, any CGT that is payable on residential properties will be either 18% on any gains which can be absorbed by the income tax basic rate band available and 24% thereafter. The CGT annual exemption is £3,000 from 6 April 2024.

If you do need any advice or would like to see how any of these changes might affect your circumstances, then please do not hesitate to get in touch.