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Key Tax Measures Unveiled in Spring Budget 2024
Introduction
In the Spring Budget 2024, the government outlined a series of tax adjustments and rate updates. These measures, alongside additional documentation from the Office for Budget Responsibility, signify a concerted effort towards simplifying the tax system and enhancing administrative efficiency.
Additionally, Tax Information and Impact Notes (TIINs) provide comprehensive insights into the impact of legislative measures outlined in the Spring Finance Bill.
Here’s a comprehensive overview of all the tax legislation and rates and their implications:
Personal Tax Adjustments
National Insurance contributions (NICs): The main rate of Class 1 employee NICs will decrease from 10% to 8% starting 6 April 2024. Additionally, the main rate of Class 4 self-employed NICs will witness a reduction from 6 April 2024, dropping to 6%. Consultations on the abolition of Class 2 NICs are scheduled for later this year.
Tax rules for non-UK domiciled individuals : Effective 6 April 2025, the remittance basis of taxation for UK resident non-domiciled individuals will be replaced with a new 4-year foreign income and gains (FIG) regime, following 10 years of non-UK tax residence.
High Income Child Benefit Charge (HICBC) : From 6 April 2024, the HICBC income threshold will increase to £60,000, with the taper extended up to £80,000. Plans are underway to transition to a household income-based system by April 2026.
Capital Gains Tax (CGT): Legislative adjustments will lower the higher CGT rate for residential property disposals from 28% to 24%, effective from 6 April 2024, while maintaining the lower rate of 18%.
UK Individual Saving Account (ISA): A new UK ISA with a £5,000 allowance is on the horizon, alongside existing ISA provisions. Consultations regarding its structure and implementation are underway.
Improving Payment Options for Income Tax Self-Assessment (ITSA): Enhancements to HMRC’s digital services are in the works to facilitate tax installment payments for ITSA taxpayers.
Business Tax Amendments
Notable measures include the introduction of New permanent rates of relief (40% and 45%) for theatre, orchestra and museums and galleries exhibition tax, and additional support for independent film will be bolstered through a new UK Independent Film Tax Credit. Moreover, a 5% increase in tax relief for UK visual affects costs in film and high-end TV will be provided under the Audio-Visual Expenditure Credit (AVEC). Furthermore, HMRC will establish an expert advisory panel to administer research and development (R&D) tax reliefs.
Excise and Duties Adjustments
Value Added Tax (VAT) Changes: Measures include raising the VAT threshold to £90,000 from 1 April 2024, and revising the de-registration threshold to £88,000. Additionally, consultations on VAT implications for the private hire vehicle sector are set to commence in April 2024.
Vaping Duty introduction: A new vaping product duty is slated for introduction in October 2026, with consultations on its design and implementation ongoing until 29 May 2024.
Stamp Duty Land Tax (SDLT) Revisions: Revisions encompass extending First Time Buyers’ Relief to individuals using nominee and bare trust arrangements. Moreover, abolition of Multiple Dwellings Relief, with consultations planned to address potential sector-specific impacts.
Tackling the Tax Gap
Cryptoasset Reporting Framework (CARF): Consultations have been launched to devise the Cryptoasset Reporting Framework and Amendments to the Common Reporting Standard.
Agents and Intermediaries Regulations
Strengthening the regulatory framework in the tax advice market: Proposals include exploring the requirement for tax advisers to join professional bodies and mandating registration with HMRC for those interacting on behalf of clients. Streamlining registration processes for tax advisers with HMRC is also under consideration.
Conclusion
To summarize, the Spring Budget 2024 includes a number of tax initiatives aimed at streamlining the tax system, increasing administrative efficiency, and maintaining justice. Significant changes include lower National Insurance contributions, changes to tax regulations for non-UK domiciled persons, and amendments to the High Income Child Benefit Charge.
Furthermore, changes to Capital Gains Tax, UK Individual Saving Accounts, and payment alternatives for Income Tax Self-Assessment are expected to benefit people.
Businesses will benefit from tax relief measures for cultural and creative sectors, improvements to research and development tax breaks, and modifications to excise taxes such as VAT revisions and the introduction of a vaping product duty.
Efforts to close the tax gap through the Cryptoasset Reporting Framework and enhance rules for tax advisers demonstrate the government’s commitment to effective taxation.
Overall, the Spring Budget represents a balanced approach to tax policy, which promotes economic development while guaranteeing tax justice and compliance.
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Consultation,Taxation
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