The Chancellor has announced his measures for the country’s finances in what was the last Spring Budget before the General Election later this year and here’s our traditional blog post detailing the key features.
National Insurance
It feels like National Insurance is something we’ve talked a lot about in recent years as it has been the preferred mechanism for reducing taxation and that is the case again this time. National Insurance rates for both employees and the self-employed will be reduced by 2% from 6th April 2024 (the start of the new tax year). This is in addition to the 2% reduction that was announced last year which came into effect from January this year.
However, there was no announcement that the amount an employee can earn before paying tax or national insurance will increase so more people will be paying tax on their earnings.
VAT
At the moment, businesses have to register for and start paying VAT once turnover reaches £85,000 but that will be increased to £90,000 from April.
Child Benefit
In recent years, the High Income Child Benefit Charge was introduced which meant if a parent earned over £50,000, then they would be liable for the charge. This did introduce an element of unfairness into the system because it meant a household of two parents earning £49,000 wouldn’t have to pay the charge but another with one parent earning £50.001 would pay the charge. The Chancellor announced he would review this scheme to address this unfairness but, in the meantime, the threshold for paying the charge would increase to £60,000.
Holiday lets
Something that’s going to be relevant to us here in Cornwall was the announcement that tax breaks on furnished holiday lets is going to be scrapped. Currently, owners of furnished holiday lets can claim tax relief on things they buy for the property including furniture and other fixtures. The Chancellor hopes that in abolishing the relief, more holiday lets will be made available for long term rent in an attempt to ease the housing crisis in tourist areas such as Cornwall.
Duties
The cut of 5p on duty on fuel was due to end this month but that cut has now been extended for another year. Tobacco duty will increase and a new tax on vapes will be introduced in October 2026 following a period of consultation.
The freeze on alcohol duty was due to end in August but that will now continue until February next year.
Household Support Fund
The Household Support Fund, which was introduced in 2021 to help the poorest families cope with the cost of living crisis was due to end in March 2024 and although there was no mention of an extension in the Autumn Statement last year, the Chancellor has now announced that it will be extended for another six months.
More information on the measures announced in this year’s Spring Budget, including some things we haven’t had room to mention in this blog, can be found here. If you have any questions about how the change to National Insurance will affect your employees or payroll, just get in touch.