Spring Budget 2024: an overview

In this briefing, our tax solicitor Michael Fluss provides an overview of the tax measures announced by the Chancellor in the Spring Budget 2024.

Personal

• With effect from tax year 24/25, National Insurance contributions (NICs) for earnings between £12,570 and £50,270 p.a. are reduced from 10% to 8% for employees and from 9% to 6% for self-employed workers. The 2% NICs rate applicable to earnings above £50,270 p.a. is unchanged.
• An additional ISA allowance of £5k for investment in UK businesses in addition to the existing £20k ISA allowance has been announced. The Government is consulting on what UK investments would qualify for inclusion in this additional allowance.
• The special tax regime for non-doms (under which, in broad terms and subject to certain conditions, non-UK domiciled individuals who are resident in the UK only pay UK tax on foreign income and gains which are remitted to the UK) is to be abolished. It is to be replaced with effect from April 2025 by a new residence-based regime under which anyone who has been tax-resident in the UK for more than four years will (only from then) pay tax on foreign income and gains (in the same way as other UK residents), subject to transitional arrangements permitting non-doms to rebase the value of their capital assets to 5 April 2019 and, as regards income, having the effect of partially sheltering existing non-doms from the full effect of the new regime for the first year or two following its introduction.
• Tax-related penalties may be imposed for late payment of income tax and VAT.
• As is currently the case with income tax, interest on late VAT will start to accrue from the date it is due.
• A new points-based penalty regime for regular tax-return submission obligations is to be introduced in place of existing penalties for late submission of VAT and income tax returns.

Property

• Multiple dwellings relief is to be abolished in relation to all acquisitions having an effective date falling on or after 1 June 2024, unless the contract was entered into on or before 6 March 2024 and has not been varied since.
• Helpfully, HMRC has confirmed that the Government has no plans to change the Stamp Duty Land Tax (SDLT) rules treating acquisitions of mixed commercial/residential property as not subject to the (generally higher) residential SDLT rates.
• The 28% Capital Gains Tax (CGT) rate applicable to disposals of residential property by higher-rate taxpayers is reduced to 24% with effect from tax year 24/25.
• Following a consultation last year, a new type of diversely owned fund, with its own distinct comprehensive tax (SDLT, capital gains, capital allowances and income tax) regime, a “Reserve Investor Fund”, taking the form of an unauthorised contractual scheme fund aimed, in particular, at professional and institutional commercial real estate investors (rather than the broader retail investment market) is to be introduced. The legislation and detailed rules are awaited.
• With effect from 6 March 2024, acquisitions by public bodies of real estate having a value of more than £500k are not subject to the flat 15% SDLT rate.

Cultural reliefs for companies in the Creative Arts sector

• With effect from 1 April 2025, Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibition Tax Relief (all of which were introduced in the last seven to ten years and currently afford relief at 50% or 45% of qualifying costs) are to be made permanent (at the rate of 45% or 40%).
• The 34% Audio-Visual Expenditure Credit (AVEC) for qualifying film productions is to be increased with effect from 1 April 2024 to 53% for “independent films” meeting the Independent Film Tax Credit qualifying criteria.

Prevention of fraud/money laundering

• The Economic Crime (Anti-Money Laundering) Levy, originally introduced in the government’s 2019 Economic Crime Plan is to be increased for very large companies (having annual revenues of over £1bn) from £250k to £500k. Small entities (under £10.2m revenue) remain exempt and the levies charged on medium and large companies (having revenues, respectively, of £10.2m to £36m and £36m to £1bn) remain at £10k and £36k, respectively (with the size bands also remaining unchanged).

VAT

• With effect from 1 April 2024, the taxable turnover threshold for VAT registration is increased from £85k to £90k.

If you have questions about any of the tax measures introduced in the Spring Budget, please contact Michael Fluss.