Spring Budget commentary by Paula Fraser

In today’s Spring Budget, Chancellor Jeremy Hunt unveiled a series of tax reforms which will significantly alter the UK’s fiscal landscape. One of the positive changes will see National Insurance contributions for employees decreasing from 10% to 8%, which will result in average savings of around £450 annually for approximately 27 million workers nationwide. This follows on from the previous 2% cut made to employee National Insurance rates in the Autumn Statement.

In a similar vein, self-employed individuals will also benefit from a 2% decrease in National Insurance rates, aligning with efforts to support entrepreneurs and small businesses across the country.

On another positive note, the Chancellor announced adjustments to the High Income Child Benefit Charge, whereby the threshold will rise from £50,000 to £60,000 from April 2024, providing additional relief for families. More households will also benefit from the raising of the top of the taper – where benefits begin to be withdrawn – to £80,000. A consultation is expected on a shift to a household-based system.

In a bid to stimulate investment and economic growth, the government has decided to reduce the higher rate of property capital gains tax on residential properties from 28% to 24%. This aims to incentivise owners to sell second homes or buy-to-let properties by lowering the rate of tax, generating more transactions in the property market to help those wanting to move or get onto the property ladder.  However, in another bid to address concerns regarding housing availability for long-term rentals, particularly for local residents, the tax breaks surrounding the furnished holiday lettings regime are being abolished.

The Chancellor confirmed that the non-domiciled (non-dom) tax status is to be abolished. A simplified residency-based taxation system will replace the current rules, in a move that is designed to align the taxation of overseas income and capital gains for all individuals residing in the UK, with a significantly more limited period of grace for foreign nationals relocating to the UK. With the new rules taking effect from April 2025, those individuals who are impacted have a full year in which to review their circumstances and make appropriate planning arrangements.

With a raft of reforms encompassing both tax cuts and rises, it is a carefully balanced Budget with an eye on the forthcoming General Election.