Jeremy Hunt’s pre-election Budget has been dubbed ‘underwhelming’. There were certainly no big surprises – particularly as the big news on National Insurance (NI) was released before the event. Disappointingly for many, the inheritance tax threshold remains unchanged at the rate set back in 2008.
To summarise the key points, employees will now pay 8 per cent NI from 6 April having seen their rate drop just a few months back in January to 10 per cent from 12 per cent in 2023. The self-employed were due to have a reduction in April of Class 4 NI contributions from 9 per cent to 8 per cent but this will now fall to 6 per cent instead. As previously announced, Class 2 NI contributions will be removed from April.
The Chancellor announced that the top rate of capital gains tax (CGT) which applies to the disposal of residential property will drop from 28 per cent to 24 per cent in the new tax year. The government’s policy paper states that this initiative is expected to ‘generate more transactions in the property market’ and ‘incentivise earlier disposals of second homes, buy-to-let property and other residential property’.
Mr Hunt negated some of that good news for landlords by announcing an end date for the furnished holiday lets (FHL) scheme. This means landlords of such holiday homes will only be able to deduct the full cost of their mortgage interest payments from their rental income until April 2025.
In a boost to smaller businesses, he increased the VAT threshold from £85,000 to £90,000 and extended the ‘full expensing’ tax relief for those making capital investments.
In terms of savings and investments, the Chancellor introduced a new ‘British ISA’ which will extend the current £20,000 tax-free limit by an additional £5,000 for investments in UK companies. This will be available from April although we await further details.
Keeping with the patriotic theme, new 3-year fixed-rate British Savings Bonds will be released by NS&I in early April although the interest rate has not been confirmed.
If you have any queries on anything contained in the Budget, please speak directly with your adviser who will be happy to help.
