We are pleased to provide you with this spring budget summary of the announcements affecting business owners.

You may have already heard of some of the key announcements that will be put in place as part of the Spring Budget. We have put together a few key points that we believe will be of interest to you.

National Insurance rates
The primary Class 1 employees NICs will be reduced from 10% to 8% and the Class 4 Self-employed NICs will be reduced from 8% to 6%. This will come into effect from 6 April 2024. However the income tax rates, frozen thresholds and personal allowance are expected to remain frozen.

Capital Gains tax for the sale of residential property
In order to encourage the sale of residential properties, the residential property capital gains tax higher rate will be reduced from 28% to 24% from 6 April 2024. Please note that the lower rate of 18% still stands.

As you may be already aware, the capital gains tax allowance has been cut. For the current tax year, 2023/2024, the allowance is £6,000 and this reduces even further from 6 April 2024 to £3,000.

Furnished holiday lets
The furnished holiday let regime is due to be abolished from April 2025. This will mean that rentals which qualified as a furnished holiday let will likely not receive the benefits from this date. This will likely include the full deduction of mortgage interest and the availability of capital asset deductions.

High income benefit charges
In the future there is expected to be a longer-term solution put into place to recover child benefit based on the household income rather than the higher earner’s income. In the interim the higher income child benefit charge threshold will increase to £60,000 (from £50,000) from 6 April 2024.
For individuals with income above £80,000 the amount of the tax charge will equal the amount of the child benefit payment. Between £60,000 and £80,000 the rate at which the higher income child benefit is charged will be halved meaning that 1% of the child benefit payment is charged for every £200 of income more than £60,000.

VAT Threshold
The threshold at which business have to register for VAT has been raised to £90,000 from 1 April 2024.

As the tax year end approaches you may wish to consider some tax planning opportunities.

Making pension contributions
The pension annual allowance for the current tax year increased to £60,000 from £40,000. As the 2023/2024 tax year comes to a close you may wish to consider making a one-off payment to your pension scheme if you have not already used your annual allowance. It should be noted that the annual allowance could be more or less, depending on factors, such as your level of income, the amount of pension contributions you have made in earlier years and whether you are already drawing a pension.

From 6 April 2023 the current lifetime allowance framework remains in place and the lifetime allowance for 2023/2024 remains at £1,073,100. However it is expected that through the Finance Bill the lifetime allowance will be fully abolished from the 2024/2025 tax year.

The dividend tax allowance from 6 April 2024 has been cut to £500 from £1,000 per year.

Gift Aid
You may wish to consider making gift aid payment before the end of the tax year. Higher rate taxpayers are able to claim an extra 20% of the grossed up donation from HMRC for those gift aided donations made during the tax year.

Individual Savings Accounts (ISAs)
The ISA allowance will be remaining at £20,000 for the 2023/24 tax year. If you are able you may wish to consider using your annual ISA allowance as this allowance is not available to carry forward.

It is expected that a new UK ISA will be introduced with a separate yearly allowance of £5,000.