It’s a new tax year – a reminder of Budget changes

The Spring Budget seems a long time ago, but now we’re in the new tax year, it might be helpful to have a reminder of some of the main tax announcements to refresh your memory.


National Insurance Contributions (NICs)

The Chancellor announced a reduction in the main rate of employee NICs by 2p in the pound from 10% to 8%, and a further 2p cut from the main rate of self-employed NICs, meaning the main rate of Class 4 NICs for the self-employed has reduced from 9% to 6%.


UK savings in focus

To promote more investment in UK assets, the government announced the introduction of a UK Individual Savings Account (ISA) with a £5,000 annual allowance in addition to the existing ISA allowance of £20,000. It will be a new tax-free savings product for people to invest in UK-focused assets (a consultation regarding implementation is running until 6 June 2024).

British Savings Bonds are now on sale through National Savings & Investments (NS&I), offering guaranteed interest rates for income or growth, fixed for three years.

The 2024/25 tax year JISA (Junior ISA) allowance remains at £9,000.


IHT consultation

There will be a consultation on moving to a residence-based regime for Inheritance Tax (IHT). No changes to IHT will take effect before 6 April 2025, so the nil-rate band remains at £325,000 and the main residence nil-rate band at £175,000, with taper starting at £2m (estate value). From 1 April 2024, personal representatives of estates no longer need to take out commercial loans to pay IHT before applying to obtain a grant on credit from HMRC.


Reviewing non-dom status and Child Benefit

The non-dom tax status will be replaced by a new residence-based system from 6 April 2025.

Changes to the Child Benefit system included an increase to the threshold for the High Income Child Benefit Charge to £60,000. The rate of the charge has been halved, so that Child Benefit is not lost in full until an individual earns £80,000 per annum, and by April 2026, the Child Benefit system will be based on household rather than individual incomes.


Housing measures to be aware of

There were some housing measures announced in the Budget, but these have bigger implications for private landlords and second homeowners rather than aspiring and current homeowners:

  • The higher rate of Capital Gains Tax (CGT) will be reduced from 28% to 24% and the lower rate of CGT has been maintained at 18%. It’s worth noting that you only pay CGT on second homes
  • The Furnished Holiday Lettings tax regime will be abolished – second homeowners can no longer deduct mortgage interest from their rental income or pay lower CGT when they sell
  • In England and Northern Ireland, Stamp Duty Land Tax (SDLT) Multiple Dwellings Relief (MDR) will be abolished from 1 June 2024. There is an equivalent MDR relief under Land and Buildings Transaction Tax (LBTT) in Scotland and it remains to be seen if the Scottish Government will consider how MDR applies in future.


Take sensible steps

Sensible tax planning can help to reduce the amount of tax you pay and safeguard your wealth for the future. We can help – please get in touch.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. The Financial Conduct Authority does not regulate tax planning. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.