There has been plenty of press coverage on the various aspects of the budget that affects individuals. Please see below the highlights of what has been announced.
What does seem to be missing is any coverage of the 8.5% increase to state pensions in April. Coupled to the 10.1% increase last April this is nearly a 20% hike in just 12-24 months.
It will be increasing important to consider pensions and ISAs as many other standard allowances and reliefs are being held or cut.
No substantive change to inheritance tax rules despite the rumours about the potential for it being abolished.
We may have one more budget before an election so it does feel a moment of ‘wait and see’ what incentives may yet materialise and if growth in the UK is above the OBR (office for budget responsibility) predictions we may yet see an election fillip.
NATIONAL INSURANCE CONTRIBUTIONS (NICS)
Employee NICs will be reduced from 10% to 8% on earnings between £12,570 and £50,270 from 6 April 2024, saving someone on an average salary of £35,400 over £450 each year.
For the self-employed, from 6 April 2024, Class 2 NICs will be abolished and Class 4 NICs will be reduced from 9% to 6% on earnings between £12,570 and £50,270.
ISA ALLOWANCES
A new £5,000 ‘British ISA’ tax allowance has been announced for individual savers to invest in UK-focused assets.
This will be in addition to existing ISA allowances which remain unchanged at £20,000 for adults and £9,000 for Junior ISAs (for those under age 18). The launch date is yet to be confirmed.
CAPITAL GAINS TAX (CGT)
The higher rate of CGT for residential property disposals will be cut 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.
The annual Capital Gains Tax exemption will reduce from £6,000 to £3,000 from 6 April 2024, as previously announced.
CHILD BENEFIT CHARGES
The High Income Child Benefit charge is going to move to a household threshold, rather than an individual threshold, from April 2026.
In the meantime, from April 2024, the individual threshold will rise to £60,000 per year and the rate of the charge will be halved so that Child Benefit is not repaid in full until an individual earns £80,000 per year.
CHANGES TO THE NON-DOMICILE TAX REGIME
The tax regime for non-UK domiciled individuals is being replaced. Under the new regime anyone who has been tax resident in the UK for more than four years will pay full UK tax on their foreign income and gains.
NEW BRITISH SAVINGS BOND
A new British Savings Bond will be delivered through National Savings and Investments and will be launched in April 2024. This product will offer a three year guaranteed interest rate.
UPDATE THE BENEFICIARIES IN YOUR PENSION
Life circumstances change, and it’s essential to ensure that your pension beneficiaries are up-to-date. Private pension providers will ensure the money, or a percentage of it, will go to your loved one in the event of your death.
Review and update beneficiary designations whenever there are changes to your personal life, including marriage, divorce, bereavement or the birth of children. This ensures that your pension benefits are distributed according to your wishes.
FURNISHED HOLIDAY LETTINGS (FHL)
The FHL tax regime is being abolished from April 2025, meaning short-term and long-term lettings will be treated the same for tax purposes in respect of mortgage interest payments.
PENSIONS
The Lifetime Allowance on pension savings will be abolished from 6 April 2024, replaced by a tax free Lump Sum Allowance of £268,275 and Lump Sum and Death Benefit Allowance of £1,073,100. The standard Annual Allowance for pension contributions remains unchanged at £60,000.
The new State Pension will increase by 8.5% from April 2024, to £221.20 a week, and the triple lock is being maintained.
INCOME TAX*
The tax-free personal allowance remains at £12,570 and the higher rate tax threshold is £50,270. These thresholds have been frozen until 2028.
*Applies for England, Wales and Northern Ireland. Thresholds differ for Scotland.
DIVIDEND TAX ALLOWANCE
This is being reduced from £1,000 per year to £500 per year from 6 April 2024.
