The 2024 Spring Budget delivered a mixed bag of news, but overall, it offers positive steps for self-employed individuals, employees, landlords, small businesses, and partnerships. Here at Short and Sons Accountants, we've compiled a breakdown of the key changes that might impact you.
Employee National Insurance reduced by a further 2%
Employees earning money through PAYE already experienced a 2% fall in the Class 1 National Insurance Contributions (NIC) from January 01 2024. This tax reduction was taken a step further in the spring budget and reduced by another 2%. This means you will now pay 8% on earnings above £12,570 instead of the 12% paid in 2023.
Self-employed NICs reduced by a further 2%
Class 4 NIC was already set to fall from 9% to 8% from April 06 2024; however, the spring budget announced that the self-employed will benefit from a further 2% reduction, bringing the class 4 contributions due on earnings above £12,570 down to 6%! This, combined with the removal of class 2 NIC, will significantly benefit self-employed earners in the near future.
If you are a PAYE employee or self-employed and want to see how the national insurance changes will affect your earnings, view our "Pay Less Tax in 2024" article.
The threshold at which the High Income Child Benefit Charge kicks in has been raised from £50,000 to £60,000. This means you'll be able to earn more before your child benefit starts to be clawed back!
Increased VAT Threshold
Businesses with a turnover below £90,000 will now be VAT-exempt, rather than the previous £85,000 threshold. This will simplify administration and save money on taxes for many small limited companies and partnerships.
Changes for Landlords
Capital Gains Tax (CGT) Reduction: Landlords will enjoy a welcome cut in CGT by 4%. This reduces the tax burden on property sales, potentially improving your overall profit.
Furnished Holiday Lettings Tax Break Abolished: Unfortunately, the tax break for furnished holiday lettings has been scrapped. This might affect your profitability if you operate in this area, as certain benefits, such as claiming the full cost of mortgage interest payments, have been taken.
Conclusion
This budget has some real positive changes with implications that will affect many people. It's important to stay informed and feel confident you're making the most of your current financial situation. Contact Short and Sons Accountants today and make the switch to us if you want to feel secure for years to come.