Spring 2024 Budget.
Following the public disclosure of the Government's budget, we present this article to summarise the Chancellor's spring budget speech.
The budget introduces higher taxes on vapes, while alcohol and fuel duties remain unchanged for another 12 months. Additionally, there are reductions in National Insurance, and plans are in place to raise the VAT registration threshold. The Chancellor also announced the removal of stamp duty relief and reforms to the non-UK domiciled tax regime, along with extending the Windfall Tax and enhancing child benefit support.
Tax on Vapes:
As part of the Government's recent efforts to discourage younger smokers, a levy on vapes has been introduced. While acknowledging the positive role of e-cigarettes in discouraging smoking, it is proposed that the VAT for vapes will rise from 5% to 20%.
Alcohol and Fuel Duty Unchanged:
The current 5p fuel duty reduction will continue for at least another year, saving drivers an additional £50 annually. Furthermore, the freeze on alcohol duty will persist until at least 1 February 2025, aiming to curb inflation.
National Insurance Reduction and VAT Threshold Increase:
In line with ongoing efforts to lower income tax, a 2p reduction in National Insurance contributions has been announced. This reduction is estimated to save the average UK citizen £448.60 per year. Additionally, the threshold for businesses to register for VAT will increase to £90,000.
Stamp Duty and Non-UK Domiciled Tax Reform:
The relief for Multiple Dwellings Relief will be abolished, effective immediately. Transactions completed before 6th March 2024 will still benefit from this relief, along with those finalised before 1st June 2024. Furthermore, preferential tax treatment for non-domiciled individuals will undergo reform, replacing the current remittance basis for taxes.
Extension of Child Benefit and Windfall Tax:
Starting from April 2024, the high-income child benefit charge threshold will rise from £50,000 to £60,000, with financial support tapering until the new upper threshold of £80,000 is met. It is anticipated that some families will be £1,300 per year better off due to this adjustment.
Describing the existing system, in which eligibility to child benefit is tied to individual rather than household income, as unfair on single parents, the chancellor subsequently announced a plan to further revise child benefit, with the intention that this benefit will instead be means-tested on household income by April 2026.
In light of the high price of energy, the 35% surcharge on the profits of oil and gas firms, known as the Windfall Tax, has been extended by 12 months to March 2029.
