Here are some of the key points from the budget:
Income Tax
No changes announced, a brief reminder of current position:
- Your personal allowance remains at £12,580.
- The point at which individuals pay the additional rate is still planed to be lowered from £150,000 to £125,140.
- Higher rate threshold remains at £50,270.
National Insurance (NIC)
- Class 4 will reduce from 8% to 6% from 6 April 2024.
- Class 1 (for employees) will reduce from 10% to 8% from 6 April 2024.
- Class 1 (for employers) remains at 13.8%.
- Class 2 will be abolished with effect from 5 April 2024.
- Secondary threshold remains at £9,100.
- Primary threshold remains at £12,570.
- For employer the level at which they start to pay Class 1 NICs for their employees will be fixed at £9,100 until April 2028.
Dividends
No changes announced, a brief reminder of current position:
- The rates of taxation on dividend income will remain as follows:
– the dividend ordinary rate – 8.75%
– the dividend upper rate – 33.75%
– the dividend additional rate – 39.35%.
- As corporation tax due on directors’ overdrawn loan accounts is paid at the dividend upper rate, this will also remain at 33.75%.
- Dividend Allowance will be reduced from £1,000 to £500 from April 2024.
Capital Gains Tax
- Capital gains tax on sales of second homes and additional residential properties to decrease from 28% to 24% from April 2024.
- Capital gains tax annual exempt amount will be reduced from £6,000 to £3,000 from April 2024.
Pension
No changes announced, a brief reminder of current position:
- The annual allowance will be increased form £40,000 to £60,000.
- The money purchase annual allowance will increase from £4,000 to £10,000.
- The tapered annual allowance will increase form £240,000 to £260,000.
Corporation Tax
No changes announced, a brief reminder of current position:
- Corporation Tax will increase to 25% for companies with profits over £250,000.
- The 19% rate will become a small profits rate by companies with profits of £50,000 or less.
- Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate.
- The above effects companies with a March 2024 year end onwards.
VAT
- From 1 April 2024, VAT threshold will increase from £85,000 to £90,000.
Employers Allowance
- Employers allowance is to remain at £5,000
National Living Wage and National Minimum Wage
- The government will increase the National Living Wage (NLW) and National Minimum Wage from 1 April 2024 as follows:
• the rate for 21 year olds and over to £11.44 an hour
• the rate for 18-20 year olds to £8.60 an hour
• the rate for under 18 (but above compulsory school leaving age) to £6.40 an hour and
• the apprentice rate for under 19 (and for over 19, but in the first year of their apprenticeship) to £6.40 an hour
Other Business Announcements:
- Launching of the Growth Guarantee Scheme – this scheme is an extension of the recovery loan scheme and will continue to provide small businesses with access to the finance they need to grown and invest.
- Introduction of a brand new British ISA – supporting business and rewarding investors, this ISA will allow people to invest upto £5,000 tax free in UK assets a year.
- Intention for ‘Full Expensing’ to extend to leased assets.
- ‘Non dom’ tax system will be abolished and replaced with a ‘modern, simpler and fairer’ system from April 2025
- Child benefit threshold will increase from £50,000 to £60,000, with a view to moving to an household based system rather than individual incomes by April 2026.
- Plans to scrap the furnished holiday lets regime.
This is meant as guidance only. No responsibility for loss occurred by any persons acting/refraining from action as a result of this information can be accepted by the Nicholson & Co (Sheffield) Ltd. It is always advisable to seek advice first.