In the Budget delivered on 6th March the Chancellor announced various tax cutting measures while at the same time abolishing the furnished holiday let tax regime. Key tax changes that were announced included the following:-
National Insurance Contributions (NIC)
- Self employment
The rate of Class 4 NIC on profits between £12,570 and £50,270 will be reduced from 9% to 6% from 6th April 2024 rather than the planned reduction to 8% from that date. This will save £1,131 per year for someone with self employed profits of £50,270 or more. - Employees
The main rate of national insurance was cut to 10% from 6th January, 2024. This will be further cut to 8% from 6th April, 2024. For someone earning £50,000 per year this could save a further £14.38 a week or £748 per year.
Capital Gains Tax
The rate of Capital Gains Tax that is payable on residential property disposals will be reduced from 28% to 24% from 6th April, 2024, but the lower rate on gains that fall within the basic rate band will remain at 18%.
Inheritance Tax
Following consultation, the scope of Agricultural Property Relief will be extended from 6th April, 2025 to cover land managed under an environmental agreement with the UK Government or other approved bodies.
High Income Child Benefit Charge
From 6th April, 2024 the adjusted net income threshold at which the charge applies will increase to £60,000 from £50,000 and the taper range will also be increased so that child benefit is not fully withdrawn until an individual earns £80,000 or more. In addition there will be consultation on switching the charge to a household income basis from April 2026 rather than on an individual basis.
VAT
The VAT registration and deregistration thresholds will increase to £90,000 and £88,000 respectively from 1st April, 2024.
Furnished Holiday Lets
The furnished holiday let tax regime will be abolished from 6th April, 2025. If furnished holiday properties are treated the same as rental properties from that date they will no longer qualify for Capital Gains Tax reliefs including Rollover Relief and Business Asset Disposal Relief. For income tax purposes they will also no longer qualify for capital allowances on plant and equipment in the dwellings and the income would be exempt for VAT purposes. We await the publication of draft legislation on this in due course and will provide an update once we have this.
Stamp Duty Land Tax
Multiple dwellings relief will be abolished from 1st June 2024. This allowed for Stamp Duty Land Tax relief on a transaction where more than one dwelling was being purchased as part of the transaction. So for transactions where there is more than one dwelling the Stamp Duty land Tax will be higher accordingly. For any property transactions with contracts that were exchanged on or before 6th March, 2024 the relief will still apply regardless of when they complete.
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