Phil Stevens, Head of Tax at Burgis & Bullock, provides his reaction to the Budget which was delivered by Chancellor Jeremy Hunt on Wednesday 6th March.
This was a Budget aimed at voters and individuals as many predicted.
Many of the cuts and savings revealed by the Chancellor are applicable primarily to employees, working families and savers.
There wasn’t a huge amount for businesses, but a few new policies and changes could be impactful.
One announcement which is intended to encourage growth in small businesses is increasing the VAT registration turnover threshold from £85,000 to £90,000 from 1 April 2024.
Campaigners were calling for an increase to £100,000 and in practice this £5,000 increase doesn’t really go far enough to make a real difference to businesses. It will still be a cliff edge as soon as you go over £90,000, with businesses immediately having to become VAT registered.
Proposals were also revealed for ‘Full expensing’ tax relief to be extended to cover leased and rented assets. This is a positive step and will be a benefit to businesses, but we will need to assess the full details before understanding just how impactful it can be.
We were expecting the advantageous treatment of non-UK domiciled individuals (or ‘non doms’) to be impacted if Labour was elected to government, however unexpectedly the Conservatives made changes in this Budget.
The current system will be abolished from April 2025, with new arrivals having the option of claiming non-domiciled status for only the first four years.
There will be a two year transitional arrangement for people currently benefiting from the current regime.
This will ring alarm bells for non-doms already here in the UK and without doubt impact some of the clients we deal with at Burgis & Bullock. However, the benefit is that we have a couple of years to plan around this and figure out the best next steps.
The extension of tax relief for the creative industry is a definite positive, especially as funding pressures continue to grow on the sector. This change is certainly welcomed in Warwickshire, particularly with how the creative industry in Leamington and surrounding areas is making advances in technology.
A big change, which will impact many people and certainly some in our client base, is the change in the income threshold applicable to the High Income Child Benefit Charge (HICBC) rising by £10,000 to £60,000 in 2024/25. The clawback charge is also being extended over a larger range, up to £80,000.
The existing system created massive inequalities and this move will be welcomed by a number of our clients.
We will also see the abolition of the beneficial regime for furnished holiday lettings as a trade for tax purposes change from April 2025. This will be a simplification to bring it in line with existing property tax rules. I wouldn’t say the beneficial treatment has often been exploited by people we work with, and as a result won’t directly impact many clients.
The headline change which was referenced in the media leading to the Budget was the cut to National Insurance Contributions (NIC). This was a 2% cut for employees and for self-employed people.
It was phrased in a way which makes you consider whether this is the start of a move away from NIC and the beginning of a realignment and tax simplification.
With NIC being the headline, that is further evidence that this was a Budget for workers and individuals – not necessarily for business.
It will be interesting to see if any further fiscal announcements are made before the General Election… it will all depend if the election is called before the Autumn Statement.
We will be publishing full guidance on the measures announced in due course, but if you have any questions on how this announcement may impact you, contact us today on 0345 177 5500.