Key Amendments Announced in the Spring Budget 2024

This month, it was Chancellor Jeremy Hunt’s turn to tinker with our taxes (and National Insurance). Here, rather than focus on the politics, we pull out the key facts you’ll need to be aware of in terms of your CII exams. We’ll also highlight some of the other key tax year changes that were previously announced.

This article is relevant to examinable tax year 2024/25 and is correct as at 11 March 2024.

Unless otherwise stated, the changes come into effect on 6 April 2024 and will be examined from 1^st September 2024.

Business Taxes

The VAT registration threshold increases to £90,000 (deregistration at £88,000) from 1 April 2024. 

National Insurance

Two new announcements here:

• Employee class 1 main rate falls from 10% to 8%.
• Self-employed class 4 main rate falls from 9% to 6%.

In addition, no self-employed person will be required to pay Class 2 NICs, though they can be paid voluntarily by those who wish to build up entitlement to the New State Pension.

High Income Child Benefit Charge

Following a great deal of press in terms of the unfairness of this charge, two changes come into effect:

• The income threshold rises from £50,000 to £60,000
• Rather than the tapered charge applying between £50,000 and £60,000, it will apply between £60,000 and £80,000.
• Once income exceeds £60,000, there will be a 0.5% charge for every £100 over, with the charge reaching 100% at £80,000.

From April 2026, the government is looking to base the charge on household income rather than the highest earner. 

Capital Gains Tax

The CGT annual exempt amount (individuals and legal personal representatives (LPRs)) falls to £3,000 and to £1,500 for trusts (subject to a minimum of £300.)

There is a reduction in the higher rate of CGT for non-exempt residential properties; from 28% to 24%. There is no change to the 18% basic rate. 

ISAs

Quite a few ISA changes are upon us, including:

• The minimum age for a Cash ISA has been raised to 18 (from 16).
• Rather than only being able to invest in one of each type of ISA each tax year, you can now open and pay into multiple cash and stocks and shares ISAs.
• Partial transfers are now permitted, regardless of when the ISA investment was made
• Innovative Finance ISAs can now hold long-term asset funds and open-ended property funds with extended notice periods.

The UK ISA will give savers an additional £5,000 ISA allowance to invest in UK-focused assets when it is launched in due course. 

Pensions

Following the abolition of the lifetime allowance and lifetime allowance tax charge, we have two new pension allowances for 2024/25:

• The lump sum allowance (LSA): £268,275 (a quarter of the former lifetime allowance of £1,073,100). The maximum a pension member can take as a tax-free lump sum from their accumulated pension funds during their lifetime unless they have a protected right to take a higher amount.
• The lump sum and death benefit allowance (LSDBA): £1,073,100. The maximum that can be taken tax-free from an individual’s accumulated pension funds during lifetime and on death (unless they have a protected right to a higher amount).
• Where either of these allowances is exceeded, the excess is taxed at the recipient’s marginal rate of income tax. 

Non-Doms (Non-Domiciled Individuals)

From 6 April 2025, a residence-based regime will be introduced, effectively replacing the current remittance regime:

• There will be a four-year relief for new arrivals into the UK, providing they have not been a UK resident for tax purposes in the last ten years. During this period, overseas income and gains will be exempt from UK tax, even if they are brought into the UK.

• Anyone who has been a UK resident for tax purposes for more than four years will then start to pay UK tax on their worldwide income and gains. Their domicile status will not be relevant.

Transitional arrangements for those already eligible for or claiming the remittance basis will be put in place including:

• The option to rebase the value of their capital assets to 5 April 2019
• A temporary 50% exemption for the taxation of foreign income in 2025/26
• A Temporary Repatriation Facility: a two-year window to bring previously accrued overseas income and gains into the UK, subject to a tax charge of just 12% 

IHT is in scope, with the intention that individuals will be subject to UK IHT on their UK assets only for their first 10 years of UK residency, rather than the current 15 out of 20 years for deemed domicile. Thereafter, IHT will be chargeable on their worldwide assets. Non-UK assets held by trusts settled after 6 April 2025 will be exempt if they are settled in the first 10 years of UK residency. 

Furnished Holiday Lettings (FHL) Regime

This regime will be abolished from 6 April 2025, meaning FHL landlords will no longer benefit from being able to pay pension contributions on the basis of their rental income, CGT rollover, holdover or business asset disposal relief. 

When will I be tested on the new rules?

The CII states:

 “Candidates will be examined on the basis of law and practice in England unless otherwise stated.  The general rule is that the new tax year and changes arising from the Finance Act will be examined from 1 September each year. Other changes, not related to the Finance Act, will not be examined earlier than 3 months after they come into effect.”