What Does the Spring Budget Mean for You and Your Money?
This Spring Budget 2024 is pitched to understand and address the varied needs of the UK’s population. It’s a strategic move to build resilience, encourage growth, and ensure prosperity in an ever-changing economic scene. Sounds promising?
We’ve taken a closer look, and tried to anticipate what the budget changes might mean for you and your money.
For ease, you can simply click on the group that best represents your interests:
- Homeowners
- Families
- High-Net-Worth Individuals
- Retirees and People Who Are Retiring
- Savers and Investors
- Young Professionals/First-Time Buyers
- Business Owners
- Self-employed
- Holiday Let Owners
- Drinkers
Homeowners
The Spring Budget 2024 introduces several measures directly impacting homeowners, aimed at boosting the housing market, supporting first-time buyers, and making property ownership more attainable and financially appealing. Key aspects include:
Capital Gains Tax Reduction for Residential Property Disposals: From 6 April 2024, the higher rate of Capital Gains Tax (CGT) for residential property disposals will be cut from 28% to 24%, while the lower rate remains at 18% for any gains falling within an individual’s basic rate band. This move is designed to encourage the sale of properties, potentially increasing the housing supply for various buyers, including those aiming for homeownership for the first time. Additionally, Private Residence Relief continues, meaning most residential property sales won’t incur CGT.
Abolition of Furnished Holiday Lettings Tax Regime: Effective from 6 April 2025, the Government will remove the tax advantages for landlords of short-term furnished holiday lettings compared to those offering residential properties to longer-term tenants. This measure is expected to balance the playing field between short-term and long-term rental markets.
Stamp Duty Land Tax (SDLT) Changes: The Government announced the abolition of Multiple Dwellings Relief from 1 June 2024, affecting bulk purchase relief within the SDLT regime in England and Northern Ireland. However, transactions with contracts exchanged on or before 6 March 2024 will still benefit from the relief, as will any purchases completed before 1 June 2024. This move follows an evaluation indicating the relief wasn’t meeting its objectives to support investment in the private rented sector.
First-Time Buyers’ Relief Adjustments: Modifications to First-Time Buyers’ Relief from SDLT will enable individuals purchasing a leasehold residential property through a nominee or bare trustee to claim the relief, effective from 6 March 2024. This includes support for victims of domestic abuse, potentially making homeownership more accessible for first-time buyers in challenging situations.
These measures reflect the Government’s commitment to supporting homeownership and the housing market, focusing on reducing taxes associated with property ownership and transactions, and addressing the housing supply by encouraging sales and long-term rentals over short-term holiday lets.
Families
For families, the Spring Budget 2024 brings forward several measures aimed at alleviating financial pressures and supporting parents with the cost of raising children. Here’s a summary of key initiatives:
Child Benefit Reforms: To better support working families, the Government plans to reform Child Benefit. This includes ending the unfairness in the administration of the High Income Child Benefit Charge (HICBC) by administering it on a household basis rather than an individual basis by April 2026. A consultation will be conducted in due course.
Increase in HICBC Threshold: From April 2024, the HICBC threshold will increase from £50,000 to £60,000, removing 170,000 families from this tax charge. The rate at which the HICBC is charged will also be halved, so Child Benefit is not withdrawn in full until individuals earn £80,000 or more, thus improving incentives for working more hours. These changes are estimated to benefit 485,000 families, who will gain an average of £1,260 in Child Benefit in 2024-25.
Childcare Support Expansion: The Government announced a significant expansion of childcare support in England, providing 30 hours a week of free childcare for 38 weeks a year for eligible working parents of children aged nine months to three years. This aims to remove barriers to work for over 400,000 parents. The first stage of this offer will roll out in April 2024, entitling eligible working parents of two-year-olds to 15 hours of childcare a week.
Investment in Childcare Providers: To support the delivery of expanded childcare support, the Government confirms that the hourly rate providers are paid to deliver free hours offers will increase in line with the metric used in the Spring Budget 2023 for the next two years. This represents an estimated additional £500 million of investment over two years, acknowledging that workforce costs are the most significant costs for childcare providers.
Collectively, these measures aim to provide financial relief and support to families, helping them manage the costs associated with raising children and encouraging work participation by reducing the financial burden of childcare.
High-Net-Worth Individuals
The Spring Budget 2024 includes measures that could significantly impact high-net-worth individuals (HNWIs), particularly through changes in taxation and investment opportunities. Key points include:
Reinstating Financial Promotion Exemptions: The government plans to reinstate previous eligibility criteria for qualifying as a high net worth or sophisticated investor. This indicates a potential easing of restrictions, allowing HNWIs greater flexibility in accessing investment opportunities.
VAT Registration Threshold Increase: The VAT registration threshold will be increased from £85,000 to £90,000, and the deregistration threshold will be increased from £83,000 to £88,000, effective from 1 April 2024. While this may not directly impact HNWIs, it could have implications for their businesses or investment interests, simplifying VAT obligations for smaller ventures they might own or invest in.
Capital Gains Tax and Stamp Duty Land Tax (SDLT) Adjustments: The document includes mentions of various tax changes, including adjustments to Capital Gains Tax rates for property disposals and SDLT reliefs. Such measures could influence investment decisions and strategies for property investors and those with substantial real estate portfolios.
Support for Investment and Savings: The introduction of new savings products and adjustments to existing investment and savings allowances could provide HNWIs with additional avenues to grow their wealth. The budget aims to enhance the attractiveness of the UK as a destination for investment, which could benefit HNWIs looking to diversify their portfolios.
Global Competitiveness and Tax Regime Changes: The budget outlines intentions to maintain the UK’s attractiveness for international talent and investment, including revising the tax regime for non-UK domiciled individuals. These changes may affect HNWIs with international ties or those considering moving to or investing in the UK.
These highlights suggest the Spring Budget 2024 brings several considerations for high-net-worth individuals, focusing on tax efficiencies, investment opportunities, and maintaining the UK’s competitive edge as a global financial hub.
Retirees and People Who Are Retiring
For retirees and those nearing retirement, the Spring Budget 2024 contains several pertinent measures that aim to support their financial security and enhance their quality of life:
Maintaining the Triple Lock: The Government reaffirms its commitment to the triple lock mechanism for the State Pension, ensuring that it rises by whichever is highest out of earnings growth, inflation, or 2.5%. For the financial year 2024-25, this commitment means a significant increase in the basic State Pension, providing additional financial support for pensioners.
Support for Low-Income Households: To assist low-income households, including retirees on fixed incomes, the Government has announced that Local Housing Allowance rates will increase to cover the 30th percentile of local market rents from April 2024. This measure is designed to help those reliant on this allowance to better afford their housing costs.
Introduction of New Savings Opportunities: The announcement of new savings products, such as the UK Savings Bonds through National Savings and Investments (NS&I), offering a guaranteed interest rate for three years, provides retirees and soon-to-be-retired individuals with new avenues for the secure investment of their savings.
Energy Support Measures: Continuing support for managing energy costs through measures like the extension of the energy price guarantee and removal of the premium for prepayment meters benefits retirees who may be more vulnerable to fluctuations in utility costs.
Increase in the High-Income Child Benefit Charge (HICBC) Threshold: While not directly targeting retirees, the increase in the HICBC threshold and changes to its application might indirectly benefit retired grandparents who provide financial support to their families.
These measures illustrate the Government’s focus on enhancing the financial resilience of retirees and those approaching retirement, providing them with increased pension incomes, support for housing costs, opportunities for secure savings, and assistance with energy expenses.
Savers and Investors
For investors, the Spring Budget 2024 introduces a variety of measures aimed at fostering a conducive environment for savings and investments alongside promoting the UK’s capital markets. Here are the highlights that impact investors directly:
Launch of a New UK ISA and British Savings Bonds: These initiatives are designed to encourage savings while supporting investment in the UK, with the UK ISA offering a £5,000 allowance in addition to the existing ISA allowance. This tax-free product allows individuals to invest in UK-focused assets. The British Savings Bonds, launching in April 2024 through National Savings and Investments (NS&I), will offer a guaranteed interest rate fixed for three years, enhancing savings opportunities for consumers.
Enhancements to ISAs: The Government is committed to enabling investments in a wide range of types through ISAs, including certain fractional share contracts. Efforts are being made to bring forward legislation to support this following engagement with the industry and the Financial Conduct Authority (FCA).
NatWest Shareholding Exit Plan: The Government continues to make progress on its commitment to exit its NatWest shareholding by 2025-26, utilising a range of disposal methods. A portion of this shareholding is intended to be offered to retail investors, supporting the development of a savings and investment culture in the UK.
Support for UK Equity Investments: The Government is implementing policies to channel more capital into UK equity markets, improving the competitiveness of the UK as a listing destination. This includes ongoing work with regulators and industry to ensure the UK’s corporate governance environment supports sustainable growth.
Private Intermittent Securities and Capital Exchange System (PISCES): The Government is consulting on PISCES, a new market designed to allow private companies to scale and grow, which is expected to boost the pipeline of future Initial Public Offerings (IPOs) in the UK.
These measures indicate a clear focus on enhancing the UK’s attractiveness for investors through various savings products, investment opportunities, and capital market reforms. The goal is to bolster the UK’s position as a leading global financial hub, providing investors with a range of options to grow their wealth and support the UK economy.
Young Professionals/First-Time Buyers
For young professionals and first-time home buyers, the Spring Budget 2024 introduces several initiatives designed to support homeownership and make property acquisition more accessible. These measures are particularly geared towards alleviating some of the financial pressures faced by those entering the housing market for the first time. Here are the pertinent highlights:
Stamp Duty Land Tax (SDLT) Adjustments for First-Time Buyers: The budget amends the rules for claiming First-Time Buyers’ Relief from SDLT in England and Northern Ireland. From 6 March 2024, individuals purchasing a leasehold residential property through a nominee or bare trustee can now claim First-Time Buyers’ Relief. This includes victims of domestic abuse, facilitating a broader range of first-time buyers in accessing this relief and thereby supporting their journey towards homeownership.
Supporting Homeownership and Encouraging Long-Term Lets: The Government is taking steps to level the playing field between short-term holiday lets and longer-term residential properties. By removing preferential tax treatments for furnished holiday lets from 6 April 2025 and abolishing Multiple Dwellings Relief from 1 June 2024, the Government aims to encourage the availability of more homes for long-term residency. These changes are expected to increase the housing supply available to first-time buyers by incentivising property owners to consider longer-term rentals or sales.
Capital Gains Tax (CGT) Reduction: The higher rate of CGT for residential property disposals will be cut from 28% to 24%, effective from 6 April 2024. This reduction encourages landlords and second homeowners to sell, potentially increasing the number of properties available on the market for first-time buyers.
These initiatives demonstrate the Government’s commitment to supporting first-time homebuyers and young professionals looking to enter the housing market.
By making it easier to claim SDLT relief, reducing the tax burden on property disposals, and encouraging more long-term housing availability, the Spring Budget 2024 aims to create a more favourable environment for those aspiring to own their first home.
Business Owners
The Spring Budget 2024 includes several key initiatives aimed at supporting business owners across various sectors. Here are the highlighted measures and their implications:
VAT Registration Threshold Increase: The VAT registration threshold will be increased to £90,000 from 1 April 2024. This move is expected to benefit over 28,000 businesses in 2024-25 by exempting them from the need to register for VAT.
Business Rates Reform: The Government has announced reforms to business rates to encourage investment and reduce overheads for businesses. This includes extending the Empty Property Relief “reset period” from six weeks to thirteen weeks from 1 April 2024, which aims to incentivise the use of vacant properties and support business expansion.
Support for the Self-Employed and SMEs: The Spring Budget 2024 continues the Government’s support for small and medium-sized enterprises (SMEs) and the self-employed by extending the Recovery Loan Scheme, now renamed the “Growth Guarantee Scheme”. Additionally, the Government has announced a further tax reduction for the self-employed by cutting the main rate of Class 4 National Insurance Contributions (NICs) from 9% to 6% from April 2024. This is in addition to the abolition of the requirement to pay Class 2 NICs, aiming to boost the disposable income of self-employed individuals.
Investment in HMRC’s Debt Management Capability: An additional £140 million investment aims to enhance HMRC’s capacity to manage tax debts, supporting both individual and business taxpayers to manage their obligations more effectively.
Energy Advice for Businesses: Recognising the importance of energy costs for businesses, the Government is examining the SME Business Energy Advice Service pilot’s findings to potentially expand support nationwide. This initiative is crucial for helping businesses manage their energy expenses more efficiently.
These measures collectively aim to reduce the tax burden on businesses, simplify the tax system, and provide targeted support to stimulate growth, productivity, and investment across the UK economy.
Self-employed
The Spring Budget 2024 introduces significant benefits for the self-employed, focusing on reducing the tax burden and providing enhanced support. Here are the key measures:
National Insurance Contributions (NICs) Reduction: The Government will further reduce the main rate of Class 4 NICs for the self-employed from 9% to 6%, on top of the 1p cut announced at the Autumn Statement 2023. This reduction takes effect from April 2024, allowing self-employed individuals to retain more of their earnings. Combined with the abolition of the requirement to pay Class 2 NICs, this will result in an average annual saving of £650 for a self-employed person earning £28,000.
VAT Registration Threshold Increase: The VAT registration threshold will rise to £90,000 from April 2024. This is to lessen the administrative load and financial pressure on small businesses. This adjustment ensures that the UK continues to have one of the highest VAT registration thresholds in the OECD, benefiting over 28,000 businesses by removing the necessity to be VAT registered.
Training Cost Deductibility for Tax Purposes: HMRC has updated guidance on the tax deductibility of training costs for sole traders and the self-employed. This measure provides clarity and encourages investment in skills development, aligning with the Government’s broader aim to boost productivity across the self-employed sector.
These initiatives underscore the Government’s recognition of the self-employed as vital contributors to the UK economy. By reducing the tax burden and supporting skills development, the Spring Budget 2024 aims to ensure that working for yourself remains an attractive and viable option, promoting entrepreneurship and economic growth.
Holiday Let Owners
For holiday let owners, the Spring Budget 2024 announced a significant policy change that will impact their taxation benefits. The Government has decided to abolish the Furnished Holiday Lettings (FHL) tax regime, effective from 6 April 2025.
This move aims to eliminate the tax advantage that landlords of short-term furnished holiday properties have enjoyed over those who let residential properties go to longer-term tenants. Draft legislation detailing these changes will be published in due course.
This abolition of the FHL tax regime is intended to level the playing field between short-term holiday lets and long-term residential lets. The decision reflects a broader Government strategy to support people living in local areas by encouraging more properties to be available for long-term rent, potentially easing the housing shortage in popular tourist destinations.
For holiday let owners, this means that the specific tax benefits associated with operating a furnished holiday let, such as capital allowances and the ability to offset mortgage interest against rental income, will no longer apply from April 2025, aligning their tax treatment more closely with that of other residential property landlords.
Drinkers
For drinkers, the Spring Budget 2024 includes a measure designed to ease the financial burden on alcohol consumption. The Government has announced that alcohol duty rates will be frozen from 1 August 2024 until 1 February 2025.
This extension of a six-month freeze previously announced in the Autumn Statement 2023 means there will be a reduction in duty across various types of alcohol compared to what would have occurred with the planned duty increase.
Specifically, there will be 2p less duty on an aver age pint of beer, 1p less on an average pint of cider, 10p less on an average bottle of wine, and 33p less on an average bottle of spirits.
This freeze is part of a broader effort to support the hospitality sector and help consumers manage the cost of living, ensuring that enjoying a drink remains a pleasure that is slightly more affordable in the face of economic challenges.
Monitor the latest response to the budget on our curated news page here: https://www.questachartered.co.uk/spring-budget-2024/