Further reductions in National Insurance Contributions (“NICs”) for employees and the self-employed and a reduction in the higher rate of Capital Gains Tax (“CGT”) for residential properties disposals featured under the personal taxes banner. Amendments will also be made to the high income child benefit charge thresholds ahead of more sweeping changes in 2026. The remittance basis regime for non-UK domiciled individuals is to be abolished and replaced from 6 April 2025 with a new residence based regime and a new residence based regime will also be introduced for Inheritance Tax. And finally, the furnished holiday letting regime is to be completely abolished from 6 April 2025.
NICs reductions
From 6 April 2024, the main rate of employee NICs is being reduced from 10 percent to 8 percent. Combined with the 2 percent reduction from 12 percent to 10 percent which was announced at Autumn Statement 2023 and took effect from 6 January 2024, according to the Budget publication this will save the average worker on £35,400 over £900 a year.
From the same date, a 2 percent reduction is also being made in the main rate of Class 4 self-employed NICs which will now reduce from 9 percent to 6 percent from 6 April 2024 (a 1 percent reduction from 9 percent to 8 percent from 6 April 2024 had previously been announced at Autumn Statement 2023). When taken together with the abolition of the requirement to pay Class 2 NICs from 6 April 2024, this should save the average self-employed individual on £28,000 around £650 a year.
CGT on residential property disposals
From 6 April 2024, the higher rate of CGT for residential property gains will be reduced from 28 percent to 24 percent. Residential property gains in the basic rate band will continue to be taxed at 18 percent.
High income child benefit charge (“HICBC”)
In order to end the current unfairness in the Child Benefit system, the Chancellor announced that from April 2026 the HICBC will move to be assessed on the overall household, rather than on an individual basis. The Government will consult on this in due course.
In the meantime, from April 2024 the HICBC income threshold where the tax commences will be increased from £50,000 to adjusted net income of £60,000, and the rate at which the HICBC is charged will be halved so that Child Benefit is not withdrawn in full until individuals earn £80,000 (up from £60,000). This essentially means that from 6 April 2024, every £100 of income over £60,000 will result in a 0.5 percent tax charge on the child benefit received.
Abolition of remittance basis for non-UK domiciled individuals
The remittance basis for non-UK domiciled individuals is to be abolished from 6 April 2025 and replaced with a UK wide residence-based regime.
Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-UK tax resident for the last 10 years.
Transitional arrangements will be introduced for existing non-UK domiciled individuals claiming the remittance basis. This will operate broadly as follows:
- There will be an option to rebase the value of CGT assets to 5 April 2019;
- A temporary 50 percent exemption for the taxation of foreign income will be available in 2025/26 only; and
- A two-year temporary repatriation facility will be available to bring previously accrued foreign income and gains into the UK at a 12 percent tax rate of tax.
Further information on these changes can be found in a technical note published by HMRC.
Inheritance tax (“IHT”)
The Government also announced its intention to move to a residence-based regime for IHT and will consult in due course on the best way to achieve this, including consulting on a 10-year exemption period for new arrivals and a 10-year ‘tail-provision’ for those who leave the UK and become non-resident. However, no changes to IHT will take effect before 6 April 2025.
Savings
The 0 percent starting rate band for savings income will remain at £5,000 in 2024/25.
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