Spring Budget 2024 Finance, Pensions and Tax General Summary
Published / Last Updated on 08/03/2024
Pensions and General Taxation
- Income tax allowances and rates unchanged (except in Scotland)
- Inheritance tax rates and allowances unchanged
- Capital gains tax allowances unchanged and will reduce to £3,000 pa from £6,000 on 6 April 2024.
- Capital gains tax higher rate taxpayer CGT rate reduced from 28% to 24% 6 April 2024.
- New Pension Tax free Cash Lump Sum Allowance (LSA) cap confirmed at £267,825 from 6 April 2024.
- New Pension Lump Sum Death Benefit Allowance (LSDBA) cap confirmed at £1,073,100 from 6 April 2024.
- Pension contributions Annual Allowance( AA), the maximum that you and employer can pay into pension each year remains at £60,000 pa.
- Money Purchase Annual Allowance (MPAA) the maximum that you and employer can pay into pension each year if you have taken some of the taxable part of any pension using flexible access drawdown remains at £10,000 pa.
- The adjusted income threshold where the Tapered Annual Allowance starts to reduce your annual allowance by £1 for every £2 over remains at £260,000.
National Insurance Contributions (NIC)
- Employee Class 1 NIC that was reduced in January from 12% to 10% of band earnings between the primary threshold and upper earnings limit; between £12,570 and £50,270, has been reduced again to 8% from 6 April 2024.
- Employee Class 1 NIC for earnings above upper earnings limited (£50,270) remains at 2%.
- Self Employed Class 4 NIC that was supposed to reduce from 9% to 8% for profits between £12,570 and £50,270 in April 2024 (Autumn Statement 2023) has been reduced again to 6% from 6 April 2024.
- Self Employed Class 4 NIC on profits over £50,270 remains at 2%.
Child Benefit
- Currently if just one parent is earning over £50,000 then child benefit is reduced and over £60,000, child benefit stops. Yet, if a couple each earn £50,000 (meaning a total household income of £100,000) they keep child benefit in full.
- From 6 April 2024 the earnings thresholds change with one parent earning over £60,000 then child benefit will be reduced and then over £80,000, child benefit stops. Yet, if a couple each earn £50,000 (meaning a total household income of £100,000) they will keep their child benefit in full. The combined income limit is being revisited to make it fairer for all.
ISAs
ISA allowance remains unchanged at £20,000 but a brand-new UK ISA is being consulted on with funds managers only able to invest in UK assets and with an additional ISA allowance of £5,000 on top of the existing £20,000.
VAT
The VAT registration threshold will increase from £85,000 to £90,000 from 1st April 2024.
Value for Money Financial Products
The government has tasked the Financial Conduct Authority with a consultation of providing consumers and retail investors with easy-to-understand value for money figures. Now, pensions and investment fund providers must quantify their total fees in one % figure. The problem is that this do not reflect whether it is fair value or not. If Company A has a high management charge of 1% pa compared to Company B with a management charge of 0.4% pa, then consumers may lean towards the cheaper charges of Company B but what if Company A’s fund performance is 10% pa average growth and Company B’s average growth is just 5% pa, then you would have better off and had better value for money investing in the more expensive fund but with more consistent, higher returns. Valur for money powers will be given to the regulator to create a value for money framework.
Watch videos on two Key Areas from the Budget:
Non Domicile Abolished and Holiday Let Regime Abolished
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