The UK government has unveiled its Spring Budget, likely the last before the upcoming general election. As expected, it focused on tax breaks to woo voters, but also included some surprises.
Chancellor Jeremy Hunt faced limited room for manoeuvre. He couldn't offer the extensive tax cuts some within his party desired, but still managed to hit some political targets. This included adopting Labour's proposal to scrap the controversial non-domiciled tax status.
Key Budget Highlights:
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High-Income Child Benefit Charge (HICBC): This unpopular tax will be reformed in two stages. Firstly, in 2024/25, the income threshold rises from £50,000 to £60,000 with a halving of the rate of charge. As a result, the full 100% HICBC charge will apply once individual income exceeds £80,000. Secondly, by April 2026, the income threshold will be switched from an individual basis to a household basis.
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National Insurance Cuts: Both employee and self-employed National Insurance contributions will be cut by 2%, building on reductions announced in November 2023. The maximum annual saving is £754.
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Property Tax Changes: The top rate of Capital Gains Tax on residential property sales will decrease to 24% in 2024/25. Additionally, special tax breaks for furnished holiday lets will end in April 2025.
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New UK ISA: A consultation for a new savings option is underway. This "UK ISA" would have a £5,000 limit (separate from the existing ISA limit) and focus on UK investments. No timeline was given for this proposal.
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