Jeremy Hunt’s recent Budget announcement unveiled several changes impacting taxpayers, businesses, and households alike. From tax cuts to adjustments in benefits and investments, here’s a breakdown of what these updates mean for you:
Taxation:
● National Insurance, a payroll tax, cut by 2p in the pound for employees and the self-employed
● Salary thresholds for income tax and national insurance remain frozen, leading to increased tax payments as incomes rise (fiscal drag)
● Non-dom tax regime, applicable to UK residents with permanent homes overseas, to be replaced with new rules from April 2025
● Establishment of a £5,000 UK ISA tax allowance for savers investing in “UK-focused” shares following a consultation
Benefits and income support:
● Full child benefits extended to households where the highest-earning parent earns up to £60,000, up from the current limit of £50,000
● Partial child benefit available for households where the highest earner earns up to £80,000
● Extension of the repayment period for individuals on benefits taking out emergency budgeting loans from the government
● Continuation of the government fund supporting individuals grappling with cost of living pressures for another six months
● Removal of the £90 administrative fee to obtain a debt relief order
● Expansion of child benefit eligibility to reach more families
Housing:
● Profit tax rate on property sales reduced from 28% to 24%
● Elimination of tax breaks for owners of holiday let properties
● Conclusion of stamp duty tax break for purchasing multiple properties in England or Northern Ireland in June
Public debt, inflation and the economy:
● UK economy predicted to grow by 0.8% this year, 1.9% next year, and 2% in 2026, with subsequent growth of 1.8% in 2027 and 1.7% in 2028
● Forecast indicates UK’s inflation rate to drop below 2% by end of June, reaching 1.5% next year
● Public debt expected to be 91.7% of GDP this year, rising to 92.8% next year, excluding Bank of England debt
● Day-to-day government spending set to increase by 1% in real terms over the next five years
● NHS budget to increase by £2.5bn next year, with additional £3.4bn allocated up to 2030 to enhance productivity
Business and investment:
● VAT registration threshold for small businesses increased to £90,000 starting April
● Extension of Covid-era government loan scheme for small businesses until March 2026
● Permanent implementation of tax reliefs for touring and orchestral productions, initially set to expire in March 2025
Here at Modina we’ll be examining the fine detail behind all the tax announcements to ensure that we can provide you with the best possible advice and guidance.
Get in touch with our friendly team for advice!
info@modina.co.uk | 020 7183 8241