Spring Budget 2024 - Top Tax Takeaways

Here are our top tax takeaways from the UK Spring Budget 2024 delivered today by Chancellor Jeremy Hunt.

1. Phased abolition of non-dom tax status. From 6 April 2025, people who qualify as resident non-doms will avoid being taxed on their foreign income and gains for only four years after their arrival. However, if a person qualifying as resident non-dom arrives in the UK having been UK non-resident for a continuous ten-year period (prior to their arrival in the UK), they will be allowed to bring the foreign income and gains arising in that period to the UK without being taxed. After four years, they will be taxed like all UK taxpayers. Transitional relief will be introduced that will include the opportunity for existing non-doms to bring foreign income and gains arising prior to 5 April 2025 to the UK for 12%.

There is also to be a move towards a residence-based approach to inheritance tax, with a consultation and no change before 2025. This is of course a far cry from much earlier speculation on possible major reform or even abolition.

2. VAT registration threshold to increase. From 1 April 2024 the annual taxable turnover threshold at which a business must register for VAT will increase from £85,000 to £90,000. The threshold beneath which a business can deregister will increase from £83,000 to £90,000.

3. Employee national insurance contributions will decrease by a further 2% from 10% to 8% from 6 April 2024 with Class 4 national insurance contributions paid by the self-employed reducing from 8% to 6%.

4. Furnished Holiday Lettings. The Furnished Holiday Lettings (FHL) regime which currently provides certain tax reliefs to landlords of qualifying short term let properties, will be abolished from 6 April 2025. This means that short-term and long-term lets will be treated in the same way for tax purposes.

5. From 6 April 2024, the Capital Gains Tax (CGT) rate for gains on disposals of residential properties will be reduced from 28% to 24% for individuals (where gains fall within the taxpayer's higher rate band), trustees and personal representatives. For residential property gains within an individual's basic rate band, the rate will remain at 18%. The CGT rate will remain at 28% for gains on carried interest. Private Residence Relief (PRR) will still be available for disposal of an individual's only or main residence.

6. The High Income Child Benefit Charge (HICBC) threshold will increase from £50,000 to £60,000 from April 2024. The level of income at which the HICBC will equal the amount of child benefit received has also increased to £80,000. The rate at which the HICBC is charged will be halved for those with income between £60,000 and £80,000. Furthermore, the government announced its intention to assess the HICBC on a household rather than on an individual basis by April 2026.

7. UK ISA. A new UK ISA will allow an additional £5,000 investment, on top of the existing £20,000 threshold, but investment will focus on UK assets.

8. Alcohol duty rates will be frozen further until 1 February 2025, meaning no increase in duty for beer, wine, cider, or spirits. This follows the freeze in rates announced in the Autumn Statement to 1 August 2024.

9. Temporary fuel duty reduced rates will remain frozen for an additional 12 months to March 2025. This follows the five pence cut in rates introduced in the Spring Statement in March 2022, which had been extended for 12 months in March 2023.

10. Stamp Duty Land Tax Multiple Dwellings Relief (MDR), which reduces the SDLT on purchases of two or more properties, is to be abolished from 1 June 2024. MDR can still be claimed if a contract was entered into on or before 6 March 2024. This change does not affect transactions in Scotland, to which LBTT applies. The “mixed use” rule for SDLT will not be changed following recent consultation.

11. A new vaping products duty will be introduced from 1 October 2026 and will apply to liquids used in vaping devices and e-cigarettes. A consultation has been published by the Government on the new duty which will close on 29 May 2024. A corresponding tobacco duty increase of £2 per 50 grams of tobacco (or 100 cigarettes) was also announced and will be introduced from 1 October 2026.

12. Air passenger duty (APD), which applies to passenger flights in aircraft of 5.7 tonnes and above, will also increase from 1 April 2025.

13. Energy Profits Levy will be extended for a further 12 months to 31 March 2029. Legislation will be introduced to disapply the levy when prices return to normal.

14. A joint HM Treasury and HMRC working group with industry representatives is to be established to identify solutions that provide clarity on the taxation of ecosystem service markets such aswoodland and peatland carbon credits, where existing law or guidance may not provide sufficient clarity.