Spring Budget 2024 – Main tax announcements

This blog discusses some of the key tax changes announced in last week's Spring Budget.

The Chancellor, Jeremy Hunt, delivered his pre-election Spring Budget on Wednesday 6th March.

Reflecting the difficult balancing act for a Chancellor in the run-up to an election but faced with uncertain financial forecasts, there was limited scope for major tax announcements.

The main business and personal tax announcements made by the Chancellor are summarised below. Some of these had been expected but there were also a few surprises.

Corporate taxes

1. Corporation tax rates: The main rate of corporation tax is to be maintained at 25% for the financial year beginning on 1 April 2025. The small profits rate is also unchanged, at 19%.

2. Potential extension of 'full expensing' to leased assets: It was announced that there is to be a consultation on any extension to leased assets of the 100% first-year allowance regime ('full expensing') for main rate expenditure and the 50% first-year allowance regime for special rate expenditure.

3. Creative and cultural tax reliefs: An enhanced expenditure credit (at 53% of qualifying expenditure) for qualifying UK independent films was announced, with effect from 1 April 2024. An increase in the rate of tax relief for qualifying expenditure on visual effects in TV and films was also announced. Also, from 1 April 2025, permanently higher rates of tax relief for theatres, orchestras, museums and galleries will take effect.

4. VAT threshold: For the first time since 2017, the compulsory VAT registration threshold has been increased (to £90,000, from £85,000 currently). This will take effect from 1 April 2024.

Property taxes

5. CGT rates on residential property: From 6 April 2024, the higher rate of capital gains tax for non-exempt residential property gains will fall to 24% (from the current rate of 28%) for individuals, trustees and personal representatives. The lower rate will remain unchanged at 18%.

6. Abolition of SDLT multiple dwellings relief: With effect from 1 June 2024, relief from stamp duty land tax (SDLT) on acquisitions of multiple dwellings will be abolished. Multiple dwellings SDLT relief currently applies to single acquisitions of more than one dwelling provided certain conditions are met and broadly operates to set the applicable rates of SDLT by reference to the average price per dwelling rather than the total price paid.

7. SDLT and public bodies: With effect from 6 March 2024, acquisitions by public bodies (central and local government bodies, health authorities and other prescribed bodies) will no longer fall within the 15% SDLT rate applicable to acquisitions of dwellings by companies and other non-natural persons. Such bodies were already outside the scope of the Annual Tax on Enveloped Dwellings charge.

Personal taxes

8. NIC rates cuts: From 6 April 2024, the main rate of primary Class 1 National Insurance contributions will be reduced from 10% to 8%. A similar reduction from 8% to 6% will take effect from the same date for the self-employed.

9. Abolition of the 'Non-Dom' tax regime: The long-standing and often challenged remittance basis of taxation for non-UK domiciled individuals will be abolished from 6 April 2025. A new residence-based regime will apply instead, under which previously non-resident taxpayers coming to the UK will not pay UK income tax or capital gains tax on foreign income and gains arising in their first 4 years of UK tax residence. We await full details of the new regime.

10. Proposed changes to inheritance tax regime: The government announced plans to move from a domicile-based inheritance tax regime to a residence-based inheritance tax regime from 6 April 2025. A consultation on these plans will follow and we await details as to the form they may take.