Posted 28th March 2024
Despite some early speculation that the Chancellor may cut income tax, he instead chose to cut the rate of National Insurance by 2%. a move to specifically help workers. Income tax bands remain unchanged.
Other notable announcements were an increase in the threshold before child benefit begins to be clawed back, the removal of the non-dom remittance basis rules, the introduction of a new UK ISA to encourage investment in UK equities, and a reduction in the higher rate of CGT on residential property.
There were no significant announcements relating to pensions, with the abolition of the lifetime allowance having already been confirmed.
National Insurance:
Following the reduction in the autumn Statement the Chancellor announced a further cut of 2% to the main rate on NI.
From 6th April, the main rate for employees will now be 8% for earnings between the primary earnings threshold and the upper earnings limit. Employees will still pay 2% on earnings above the upper earnings limit. For self employed there are changes to the way they pay NI from April, however there is no change to the actual limits and thresholds for Class 2 and Class 4 next tax year.
ISA changes:
Subscription limits remain fixed at £20,000 for adults and £9,000 for junior ISAs. However a new UK ISA is to be introduced to support UK investment. This gives savers an additional annual subscription allowance of £5,000 on top of the existing £20,000 limit. Consultation on the design and implementation of the ISA will be open until 6th June 2024.
Reforming child benefits:
Child benefit is currently based on the highest earner in the household and is withdrawn at a rate of £1 for every £100 earnings they have over £50,000. This is achieved via a tax charge and means families will not enjoy any child benefit if the high earner has income over £60,000.
From April 2024, the threshold at which child benefit is withdrawn will increase from £50,000 to £60,000, and the rate of withdrawal will be £1 for every £200 of income. Child benefit will therefore be extinguished once the highest earners income exceeds £80,000.
Capital gains on residential property:
The rate of CGT payable on disposal of a residential property is to be reduced, this will benefit homeowners and those with buy to let properties. The higher residential property CGT rate is to be cut from 28% to 24% from 6 April 2024. Gains falling within the basic rate will continue to be taxed at 18%. An individuals main residence will still be exempt from CGT.
The CGT rates for all other disposals of non-residential property remain at 10% and 20% and as previously announced the annual CGT exempt amount will fall from £6,000 to £3,000.
Changes to the taxation of non-UK domiciles:
It was announced that from 6th April 2025 the remittance basis of taxation for non-UK domiciled individuals will be abolished. This will be replaced with a new Foreign Income and Gains (FIG) regime which is determined by UK residency rather than domicile.