Spring Statement Overview

You can view and download a full overview of the Spring Statement here.

Further comment from Anthony Andreasen, director Director of Tax, is below –

“In a climate where the North East and wider UK economy is continuing to battle against significant headwinds, the Chancellor’s lengthy speech provided some encouragement for regional businesses, but may well have left many others wanting more.

“The increase of the VAT registration threshold from £85,000 to £90,000 will make a difference to some small businesses and self-employed people. It may encourage customers to make new or additional investment with them, but it does not go as far as some had called for and does not fully balance the impact of this threshold having been static for the last seven years.

“The much-trailed reduction in National Insurance contributions for individuals and the self-employed is balanced by the continuing freeze in personal allowances. With the rate of inflation still well ahead of the Bank of England’s two per cent target, many people are still likely to paying out at least as much as they’re getting back.

“The four per cent reduction in the higher rate of capital gains tax paid on profits from selling residential property may provide some new momentum to a market that has recently been lacking in confidence, while the changes in the child benefit earnings threshold will have a direct impact on the amount of money coming into a significant proportion of households.

“The abolition of the tax reliefs currently available on costs incurred furnishing holiday lets will have a direct impact on the many people who rent out second homes in the region. It may encourage some of them, as seems at least partly the Chancellor’s aim, to make their homes available for long-term rental instead, which will help the supply of rental property in popular holiday destinations.

“With the renewables sector becoming an increasingly important part of the North East economy, the commitment of an additional £120m to the Green Industries Growth Accelerator scheme, which will help to build supply chains for new technologies, will be very much welcomed by many regional firms.

“The commitment to full expensing on leased assets has the potential to make a difference to business finances, but with no timeline given on its introduction, this won’t be realised in the short term.”

Notable headlines –

National Insurance cuts for employees

• 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.

National Insurance cuts for self-employed

• 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

• From April 2025 the government will abolish the current tax regime for non-UK domiciled individuals and replace it with a 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).

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.

If you have any questions or concerns about the impact of the above on your business, or are seeking other help for your business, please do not hesitate to get in touch.