7 key takeaways from the 2024 Spring Budget and what they mean for you

Spring is the season of renewal, a time for dusting out your old cobwebs and starting afresh. And, on the UK financial calendar, it is, of course, time for the budget.

Last month’s Spring Budget was likely to be the final UK budget before the next election, which will either come in late 2024 or early 2025.

Chancellor Jeremy Hunt’s headline announcements included further cuts to National Insurance contributions (NICs), changes to the Child Benefit scheme, the intended abolition of the non-dom tax regime, and a proposal for a new British ISA.

Read on to find out seven key takeaways from the Spring Budget and what they could mean for you.

1. Further cuts to National Insurance contributions

Following the changes to NICs that came into effect in January 2024, the Spring Budget included further cuts to NICs starting from 6 April this year.

The chancellor cut the main rate of employee NICs by 2p in the pound from 10% to 8%. Combined with the 2p cut announced in the Autumn Statement that took effect in January, this could have a significant impact on your finances.

For example, if you are employed and earn the average salary of £35,400 a year, the combined NICs cuts will save you around £900.

Furthermore, if you are self-employed, you may also benefit from the chancellor’s decision to cut the main rate of Class 4 NICs from 9% to 6%.

Alongside the abolition of the requirement to pay Class 2 NICs announced in last year’s Autumn Statement, if you earn £28,000, the NICs cuts for the self-employed would save you around £650 a year.

2. The abolition of the non-dom tax regime from April 2025

The non-dom tax regime has been part of the UK’s tax system for over 200 years. It has allowed UK residents whose permanent home is outside the UK to benefit from the “remittance basis”, which exempts parts of their foreign income and gains from UK taxation.

In the Spring Budget, the chancellor announced the abolition of the non-dom tax regime from April 2025.

Under the forthcoming rules, if you are a new arrival to the UK, you will not have to pay tax on your foreign income and gains for the first four years of your UK residency. But after that, you will be taxed on your worldwide income and gains and pay the same rates as other UK taxpayers.

If you are a current non-dom, transition arrangements will be set up to allow you to adjust to the changes gradually.

3. ISA allowances remain the same, but the British ISA could lead to an increase

ISA allowances are to remain capped at £20,000 for the 2024/25 tax year.

However, the chancellor announced the proposal for a new “UK” or “British” ISA that will remain under consultation until June.

If the British ISA is greenlit, you will be able to invest an additional £5,000 a year into UK equities, with the same tax advantages as the current ISAs. This means that, if the British ISA is to go ahead, your annual ISA allowance could increase to £25,000.

Although the consultation period for the British ISA runs until June, there has been no further announcement as to when you would be able to open one.

4. State Pension increases have come into effect and the Lifetime Allowance has been abolished

As previously announced in the Autumn Statement, the full State Pension is now £221.20 a week if you reached State Pension Age after April 2016, and £169.50 if you reached it before April 2016. This represents an increase of 8.5%.

The government has also now fully abolished the Lifetime Allowance (LTA). Previously, you could make up to £1,073,100 of tax-efficient pension contributions over your lifetime, and once you exceeded that limit, you could have faced a tax charge on withdrawal.

There is no longer an LTA limit, meaning you can make more tax-efficient contributions to your pension savings.

Instead, the Lump Sum Allowance (LSA) limits the amount you can draw from your pension as a tax-free lump sum.

For most people, you can usually take up to 25% of your pension – with a maximum limit of £268,275 – as a tax-free lump sum once you reach age 55 (57 from April 2028).

5. Changes to Child Benefit could impact nearly half a million families

From April 2026, UK Child Benefit will be based on your household income rather than your individual income.

The High Income Child Benefit Charge is a tax charged on higher earners if you receive Child Benefit. For the 2024/25 tax year, the threshold for the High Income Child Benefit Charge is £60,000, up from £50,000. The government estimates this will take around 170,000 families out of paying this charge.

Moreover, the chancellor halved the rate of the High Income Child Benefit Charge, meaning that Child Benefit is not lost in full until you earn £80,000 a year.

The government estimates that nearly half a million families will gain an average of £1,260 in 2024/25 as a result.

6. Changes to housing and property taxes

The chancellor cut the top rate of Capital Gains Tax (CGT) paid on the profits you make when you sell a second or buy-to-let property from 28% to 24%.

In addition, from April 2025, if you own a second home that is a Furnished Holiday Letting (FHL) you will no longer benefit from tax relief.

Furthermore, the chancellor announced the abolition of the Stamp Duty Multiple Dwellings Relief, from June 2024. This is a tax relief for when you buy more than one property in a single transaction.

7. Other announcements

Other announcements in the Spring Budget included:

  • Retaining the 5p cut in fuel duty for another year and freezing fuel duty for the 14th year running.
  • Increased air passenger duty on business class flights
  • An increase in the VAT registration threshold from £85,000 to £90,000.

Get in touch

To find out more about how the Spring Budget could affect you and what it could mean for your financial plan, get in touch.

Email us at hello@vwmwealth.com or call us on 0141 229 4004.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

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