On Wednesday 6 March 2024, the Chancellor Jeremy Hunt presented the Spring Budget, alongside the latest economic forecast from the Office for Budget Responsibility (OBR).
A summary of the key announcements is set out below.
Business tax
Capital allowances - At the Autumn Statement 2023, the government made full expensing permanent, allowing businesses to write off the full cost of qualifying plant and machinery investments against their taxable profits.
The government has now announced that full expensing will be extended to assets for leasing when fiscal conditions allow and will shortly publish draft legislation.
Creative industries - The government has announced over £1 billion of new tax reliefs for the UK's creative industries, including a 40% relief from business rates for eligible film studios in England for the next 10 years, introducing a new UK Independent Film Tax Credit, and an increase in the rate of tax credit by 5% and removal of the 80% cap for visual effects costs in the Audio-Visual Expenditure Credit. In addition, a permanent extension will be made to tax relief for theatres, orchestras, museums and galleries.
Reserved Investor Fund - The government introduced a new Reserved Investor Fund, a tax-efficient investment fund vehicle for institutional investors, and published a summary of responses to a 2023 consultation on its scope and design for a new UK investment fund vehicle. The government will begin legislating this in the Spring Finance Bill 2024.
Investment Zones Programme Expansion - Further details were provided on current Investment Zones. Investment Zones will also be extended from five to ten years in Scotland and Wales, with full details being announced later this year. Details on the Northern Ireland Investment zone will be published soon.
Energy profits levy - The government will extend the Energy Profits Levy for an additional year until March 2029. The Government will also implement legislation to ensure that the Energy Profits Levy will end when oil and gas prices fall below the levels set by the Energy Security Investment Mechanism if this is prior to March 2029.
R&D tax reliefs: HMRC will establish an expert advisory panel to support the administration of the R&D tax reliefs. The panel will provide insights into the cutting-edge R&D occurring across key sectors such as tech and life sciences, and work with HMRC to review relevant guidance, ensuring it remains up to date and provides clarity to claimants.
Personal tax
National Insurance Contribution (NIC) rates - The following was announced:
- The main rate of Class 1 employee NICs will be reduced by 2p from 10% to 8% from 6 April 2024. This is in addition to the 2p cut announced at Autumn Statement 2023 with effect from 6 January 2024.
- The main rate of Class 4 NICs, paid by self-employed earners, will be reduced by 3p from 9% to 6% from 6 April 2024. This replaces the cut to 8% announced at Autumn Statement 2023.
- The government will launch a consultation later this year to deliver its commitment to fully abolish Class 2 National Insurance. This follows the announcement at Autumn Statement 2023 that from April 2024 no self-employed person will be required to pay Class 2, whilst those who pay voluntarily will continue to be able to do so to build entitlement to contributory benefits.
High income child benefit charge - The government will raise the threshold for the High Income Child Benefit Charge from £50,000 to £60,000 from 6 April 2024, and there will be a tapered charge between £60,000 and £80,000. The government will also consult on moving to a household based system rather than one based on individual incomes from April 2026.
Non-domiciled individuals - The government will abolish the current tax regime for non-UK domiciled individuals and replace it with a residence-based regime:
- From 6 April 2025 the government will introduce a new residence based regime.
- Under the new regime, anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains, regardless of their domicile status, with a four-year relief for new arrivals (provided they have been non-tax resident for the last ten years).
- Transitional arrangements for existing non-doms claiming the remittance basis will include an option to rebase the value of capital assets to 5 April 2019 and a temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025-26).
- The government will also introduce a two-year Temporary Repatriation Facility for individuals who have paid tax on the remittance basis prior to 6 April 2025 to bring previously accrued foreign income and gains into the UK at a 12% rate of tax.
- Eligible employees will also be able to claim Overseas Workday Relief in their first three years of tax residence for income from employment duties carried out overseas.
- The government also intends to move to a residence based regime for Inheritance Tax and will consult in due course on the best way to achieve this. No changes to IHT will take effect before 6 April 2025.
Capital gains tax - The government will reduce the higher rate of Capital Gains Tax on residential properties from 28% to 24% from 6 April 2024. The lower rate will remain at 18% for any gains that fall within an individual’s basic rate band.
Furnished holiday lettings - The government abolished the Furnished Holiday Lettings tax regime from 6 April 2025.
Pensions - The government intends to bring forward requirements for Defined Contribution pension funds to publicly disclose the breakdown of their asset allocations, including UK equities. The Financial Conduct Authority (FCA) will consult on this in due course. The government will introduce equivalent requirements for Local Government Pension Scheme Funds in England and Wales, potentially, as early as April 2024. Further measures may then be announced if the data does not demonstrate that UK equity allocations are increasing. In addition, the government is working with the FCA and pension regulator on the Value for Money pension framework. The framework will highlight where pension schemes are focusing on short-term cost savings at the expense of long-term investment outcomes. Where persistently poor outcomes for savers are found the FCA and The Pension Regulator will have regulatory powers to intervene.
UK ISA and British Savings Bonds - The government has announced the launch of a new UK ISA and British Savings Bonds. The UK ISA will be a £5,000 allowance in addition to the existing ISA allowance and will be a new tax-free product for people to invest in UK-focused assets. The British Savings Bonds will be delivered through National Savings and Investments and will be launched in April 2024. This product will offer a guaranteed interest rate, fixed for three years, increasing the savings opportunities available to consumers.
Childcare - The government announced that the hourly rate childcare providers are paid to deliver the “free” hours offered for children aged nine months to four years will increase in line with the metric used at the Spring Budget for the next two years.
Transfer of Assets Abroad – The government will legislate in the Spring Finance Bill 2024 to ensure individuals cannot use a company to bypass anti-avoidance legislation, known as Transfer of Assets Abroad (ToAA) provisions, in order to avoid UK income tax. The changes will take effect for income arising to a person abroad from 6 April 2024.
Investment in HMRC Digital Services – The government will improve and simplify HMRC’s digital services to support Income Tax Self Assessment taxpayers seeking to pay tax in instalments and these changes will be implemented from September 2025.
IHT Administrative Reform - From 1 April 2024, personal representatives of estates will no longer need to have sought commercial loans to pay inheritance tax before applying to obtain a “grant on credit” from HMRC.
Indirect taxes & Duties
VAT registration threshold - The government will increase the VAT registration threshold to £90,000 and the VAT deregistration threshold to £88,000 from 1 April 2024.
Fuel duty - The government will maintain the rates of fuel duty at the current levels for a further 12 months, through extending the temporary 5p cut and cancelling the planned increase in line with inflation for 2024-25.
Alcohol duty - The government will freeze alcohol duty rates at current levels until 1 February 2025.
Vaping products duty - The government will introduce a vaping products duty of £1.00 per 10ml for nicotine free liquids, £2.00 per 10ml on liquids that contain 0.1-10.9 mg nicotine per ml, and £3.00 per 10ml on liquids that contain 11mg or more per ml from 1 October 2026 with registrations for the duty opening from 1 April 2026. The government has published a 12 week consultation on the policy design and technical details alongside the Budget. The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco from 1 October 2026.
Air passenger duty - The government will increase the non-economy class rates of Air Passenger Duty from 2025-26 to account for high inflation in recent years. Air Passenger Duty for economy flights will remain frozen.
Landfill Tax - The Government will adjust landfill tax rates for the year 2025-26 to better reflect actual RPI. The standard rate of Landfill tax will increase to £126.15 per tonne and the lower rate will increase to £4.05 per tonne.
VAT Retail Export Scheme – The government will consider these findings of the OBR’s review into the 2021 removal of the VAT retail export scheme alongside industry representations and broader data.
Fuel duty on road fuel gases – Following review, the government will maintain the difference between road fuel gas and diesel duty rates until 2032.
VAT Treatment of Private Hire Vehicles – The government will launch a consultation on the impacts of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC in April 2024.
Terminal Markets Order – The government will update the VAT Terminal Markets Order (TMO). This will allow for further reform, including bringing trades in carbon credits within the scope of the TMO.
Carbon border adjustment mechanism - The government will publish its detailed consultation on the Carbon Border Adjustment Mechanism (CBAM) later in 2024. The government announced in December 2023 that CBAM will be implemented from 1 January 2027.
Other measures
Tax Administration and Maintenance Day – The government will bring forward a further set of tax administration and maintenance announcements on 18 April 2024.
Stamp duty land tax - multiple dwellings relief - The government will abolish Multiple Dwellings Relief from 1 June 2024.
Tackling non-compliance - The government will invest in HMRC's capacity to collect tax debts, which is forecast to raise over £4.5 billion of tax revenue by 2028-29.
Crypto asset reporting framework - The government introduced a Crypto-Asset Reporting Framework from 2026, to improve transparency and compliance in the crypto-asset market.
Regulation of tax advisers
The Government has launched a consultation into raising standards in the tax advice market, presenting a range of options for a strengthened regulatory framework, and requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf