In a pivotal pre-election announcement, Jeremy Hunt outlined key fiscal changes likely to impact small businesses and property managers across the UK.
During this briefing, the Chancellor introduced a series of modifications, including additional reductions in National Insurance contributions, a higher threshold for VAT registration, and revisions impacting areas like travel, lending, and property management for small enterprise operators and landlords.
Key highlights from the Chancellor's address and the HM Treasury documentation include:
National Insurance Adjustments
- The Chancellor has declared further reductions in National Insurance (NI). Starting from April 6, the primary rate for Class 4 NI contributions for the self-employed will decrease to 6%, reflecting an extra 2% cut announced today, following a 1% reduction in last Autumn's statement. This adjustment means a typical self-employed individual earning £28,000 annually will see savings of £650 yearly, combined with the removal of Class 2 NICs also announced last autumn.
- Additionally, Class 1 employee NI contributions will see a 2% decrease, moving from 10% to 8% starting April 6.
- The abolition of mandatory Class 2 NI contributions for the self-employed will take effect from April this year, as announced in the previous Autumn's statement.
VAT Registration and De-registration Thresholds
- From April 1, 2024, the VAT registration threshold will increase from £85,000 to £90,000, marking the first increase since April 2017. Businesses with annual VATable sales exceeding this limit, or anticipated to exceed it within the next 30 days, must register for VAT. Further details are available on HMRC's website and in our informational guides.
- The VAT de-registration threshold will also rise to £88,000 from April 1, 2024, allowing businesses with VATable sales below this level to deregister, up from the current £83,000 threshold.
Loan Support Schemes
- The government has extended the Recovery Loan Scheme, now renamed the Growth Guarantee Scheme, until the end of March 2026. This initiative offers a 70% government guarantee on loans up to £2 million for SMEs in Great Britain and £1 million in Northern Ireland. More information can be found on the designated Recovery Loan Scheme page of our glossary.
Tax Deductibility for Retraining
- New HMRC guidance has been issued on the tax deductibility of training expenses for self-employed individuals. This ensures that costs for updating skills or keeping pace with technological and industrial changes are allowable deductions for tax purposes.
Changes in Furnished Holiday Lettings Tax Regime
- The tax regime for Furnished Holiday Lets (FHL), which previously offered tax benefits for properties let out as holiday homes, will be discontinued in April 2025. Consequently, tax treatment for short-term and long-term rentals will be standardized.
Capital Gains Tax Adjustments
- A reduction in the higher rate of Capital Gains Tax (CGT) on residential properties from 28% to 24% will take effect from April 6, 2024. The lower rate will remain at 18%.
New ISA and Increase in Allowance
- A new UK ISA aimed at promoting domestic investment opportunities will be introduced, featuring a tax-free allowance of £5,000, which supplements the existing ISA allowance, raising the total tax-free investment limit to £25,000.
Modification of High Income Child Benefit Charge Threshold
- From April 6, 2024, the threshold for the High Income Child Benefit Charge will increase from £50,000 to £60,000, with the taper range expanding from £60,000 to £80,000.
Tax Duties and Fuel Costs
- There will be an increase in Air Passenger Duty for premium travel classes to account for recent inflation, while the duty for economy class remains unchanged.
- Fuel duty will remain unchanged, continuing the 5p reduction introduced in 2022 until March 2025.