Earlier today Chancellor Jeremy Hunt announced this year’s Budget which will be the last one before the next general election later on this year.

As your trusted accountants, we have written up a short summary for you to read which contains the key announcements and thoughts from Gravitates Co-founder Sam Newton.

Key Changes

1. National Insurance will be dropping 2%.

Employee (Class 1) will drop from 10% to 8% and Self Employed (Class 4) will drop from 9% in the current year (8% had already been announced but has decreased further) to 6%.

This is a great benefit to all working individuals as will directly impact their pay. There is no benefit to business owners from this. The decrease in self-employed national insurance further decreases the tax incentives for one-man-bands to incorporate.

2. VAT Threshold for which small business must register to pay VAT has changed from £85,000 to £90,000 and will be effective in April.

This increase is well overdue but probably not significant enough and certainly not in line with inflation given it has been £85,000 since 2017.

3. Full child benefits to be paid to households where the highest-earning parent now earns up to £60,000. This benefit was previously available for up to £50,000. Furthermore, partial child benefit to be paid where highest earner earns up to £80,000.

Some parents will plan their income around this as previously when you earn over £50k you will suffer taxes coupled with a loss of benefit. This is an increase of 20% which will be a welcome increase for the average household income.

4. Property Capital Gains tax for Higher income earner reduced from 28% to 24%.

This is a nice benefit for higher earners who also buy and sell property, with quite a sizeable decrease. This should be considered if you are in the process of selling a property now.

Other changes to be aware of

·     New “£5,000 British ISA” tax allowance for individuals to invest in UK companies.

·     Fuel duty frozen again and the 5p cut in fuel duty in petrol and diesel due to end later this month is now being extended another year.

·     Alcohol duty frozen is to be extended till February 2025 instead of ending in August this year.

·     From October 2026, a new tax on vaping products will be introduced following a consultation.

·     Air passenger duty (the tax paid on flights) togo up for business and first-class tickets.

·     “Windfall” tax on the profits of energy firms will not end in March 2028 as it’s been extended for another year.

·     Stamp Duty Land Tax (SLTD) relief on Multiple dwellings is to be scrapped.

·     UK’s inflation rate forecast to fall below 2% in a few months. If this happens, we will see a reduction in mortgage interest rates.

·     Non-Domiciled Tax Regime for UK Tax residents whose permanent home are overseas is to be abolished from April 2025. This will be replaced with an alternative scheme with No tax on foreign income for the first 4 years.

If you have any questions on how these announcements will affect you or your business, please contact your designated Client FD or click here.

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