A quick summary of the 2024 Spring Budget – not as impactful as the media had promised, small changes to the VAT Registration and De-registration thresholds, and changes to the National Insurance rates for employees.
We have to bear in mind that there is likely to be a General Election at some point in 2024, and so this budget is likely to be very conservative in its changes.
National Insurance Contributions:
The main rate for employees’ National Insurance will decrease from 10% to 8%, and for the self-employed, it will drop from 8% to 6%, effective from April 2024. This change aims to save workers up to £450 annually.
Non-Dom Tax System:
The non-dom tax system will be abolished in April 2025, bringing those benefiting from it under the same tax rules as other UK residents. This change targets fairness in the tax system.
British ISA:
A new “British ISA” will be introduced, offering an additional £5,000 tax-free allowance on top of the existing £20,000 limit. This initiative encourages investment in UK assets and supports business growth.
Child Benefit Reforms:
The child benefit system will be overhauled to ensure fairness. The reforms will address discrepancies where households with similar earnings receive different benefit amounts.
Inflation and Economic Growth:
Inflation is expected to drop below the government’s 2% target within a few months. Economic growth is projected at 0.8% for this year and 1.9% for the next, showing a positive outlook.
Digital Transformation of the NHS:
The government will invest £3.4 billion in the NHS, focusing on digital transformation. This includes enhancing the NHS app and integrating AI into healthcare systems.
Alcohol and Fuel Duties:
Both alcohol and fuel duties will remain unchanged, with a freeze on the fuel duty and the continuation of a 5p tax cut.
VAT Registration Threshold:
The VAT registration threshold will be increased from £85,000 to £90,000, removing tens of thousands of small businesses from the VAT system.
Oil and Gas Windfall Tax:
The windfall tax on oil and gas producers will be extended until 2029, expected to raise £1.5 billion.
Summary:
•National Insurance contributions reduced.
•Abolition of non-dom tax system.
•Introduction of the British ISA.
•Child benefit system reforms.
•Expected drop in inflation and moderate economic growth.
•Significant investment in NHS digital transformation.
•No changes in alcohol and fuel duties.
•Increased VAT registration threshold.
•Extended windfall tax on oil and gas producers.
For detailed advice on how these changes might affect your business, feel free to contact us. We’re here to help you navigate these updates and optimize your financial strategies.
