Teasers for the 2024 Budget had been dropped across the preceding fortnight but nevertheless, Budget Day still contained a few surprises.

Chancellor Jeremy Hunt was under great political pressure to add to the tax cuts announced in his Autumn Statement 2023 and, if possible, steal a march on Labour’s tax plans. However the Office for Budget Responsibility (OBR) had made clear his scope for generosity was minimal.

Mr Hunt managed to square the circle, but only by bringing his margin of error down to just £9 billion in 2028/29, a figure which the OBR described as

“a tiny fraction of the risks around any forecast”.

What’s new?

Some of the Chancellor’s Budget measures likely to affect you include:

• National insurance contributions (NICs) The main rates of employee (class 1) and self-employed (class 4) NICs will be reduced by two percentage points to 8% and 6% respectively from 6 April 2024. The 2% rate on earnings/profits above £50,270 is unchanged. These reductions once again alter the mathematics around the wisdom of incorporation and whether to draw bonuses or dividends.
• High Income Child Benefit Charge (HICBC) The income threshold at which this charge starts to bite will rise from £50,000 to £60,000 for 2024/25. Simultaneously the rate of charge will halve to 1% for each £200 over the threshold. Consequently, the size of the income band in which the HICBC can apply will double to £20,000 (£60,000 to £80,000). By 2026, the income threshold is expected to move from an individual to a household basis.
• Residential property The maximum capital gains tax (CGT) rate on residential property gains will be cut from 28% to 24% in 2024/25, while all other CGT rates remain unchanged. Some second homeowners will be stung, however, as the favourable tax rules for furnished holiday lets will be scrapped from April 2025.
• UK ISA The Chancellor issued a consultation paper on a ‘UK ISA’, with UK-focused investment options. This new variant will have a contribution limit of £5,000, which will be in addition to the existing overall £20,000 ISA limit (unchanged since 2017/18).
• Non-domicile rules The arcane tax rules which offer favourable tax treatment to some UK residents with a foreign domicile will be scrapped from 2025/26. The new regime will be based solely on tax residence, although transitional rules will apply for those already claiming the status.

The income threshold for the HICBC will rise from £50,000 to £60,000 for 2024/25. By 2026 the income threshold is expected to move to a household basis.

If any of these changes could affect you or your business, or you would like further information on the Budget’s contents, please do not hesitate to contact us.