Chancellor Jeremy Hunt announced his Spring Budget in parliament yesterday, bringing us eagerly awaited tax cuts and increased allowances. In this blog post we are dissecting the highlights and implications of his decisions, and letting you know how all of this affects you!
National Insurance
The first major change made to National Insurance is the rate for employees (class 1) will be decreasing from 10% to 8% from April. This is expected to save workers on an average salary of roughly £450 per year!
Secondly, they have decided to cut class 4 contributions, paid by the self-employed from 8% to 6% from April. This follows the previous announcement made in the Autumn Statement that class 4 NI would be reduced from 9% to 8%, which shows just how much the government's plan has changed from November...
Child Benefit
An announcement that should be quite popular is the extension of the threshold on the high-income child benefit charge. This is the tax charge payable on child benefits received if your income is over £50K, though this will now be raised to £60K. The tax charge will also be tapered for incomes between £60-80K. This change will be applicable from April.
Jeremy Hunt also announced that he will consult on a new rule to make the child benefit calculation apply to collective household income, rather than on an individual basis. However, this will not be introduced until April 2026.
Fuel & Alcohol Duty
Do you remember the 5p cut to fuel duty announced last year to help with the rising fuel prices? Well, this has been extended for another 12 months, and the current rate has been frozen. The Chancellor claims this will save the average car driver around £50 next year- which doesn't sound like much in the grand scheme of things, but I suppose every little counts!
The rate of alcohol duty has also been frozen for an additional six months- this was originally meant to end in August, but will now remain until February 2025.
VAT
VAT changes were brought up in this year's budget- which is one we haven't heard in a while! The VAT registration threshold will be increasing from £85K to £90K from April 1st, and the de-registration threshold will increase in line with this to £88K. This is the first time these thresholds have been changed in 7 years, and it is a change that should make some small businesses very happy.
Properties
A few changes were made to taxes in relation to properties, including capital gains tax. The higher rate of capital gains tax on property will be decreasing from 28% to 24% from April.
Another change concerning properties is the stamp duty relief applied to people buying a second dwelling has been scrapped. This means people will have to shell out more tax when buying an additional property. The Chancellor said his reasoning for this was that it was being regularly abused.
Lastly, the furnished holiday lettings regime will be abolished from 2025. This is a scheme that currently makes it more profitable for people to let out their additional properties to holidaymakers, rather than rent them out to long-term tenants.
Vaping and smoking
A new vaping levy will be introduced from October 2026, alongside a one-off increase to tobacco duty. This is to ensure it does not become cheaper to smoke than vape.
British Isa
A new special British ISA will be created to allow the public to exclusively invest in the UK. This will be encouraged by increasing the tax-free allowance on this particular ISA by £5000. The aim of this is to provide more investment and capital within the UK, to grow local businesses.
And that is everything you need to know from yesterday's budget! Overall there were quite a few changes to taxation, though some were definitely more significant than others. What were your overall thoughts on the budget? Let us know in the comments!