As expected, the chancellor reduced the rate of class one (employees) and class four national insurance contributions in the Budget.
This further reduction is effective from April 6, 2024 and the annual saving may be up to £754 for employees and self-employed individuals.
Individuals with earnings or profits below £50,270 will see a smaller saving and those who do not currently pay NICs, such as pensioners and unincorporated landlords, will not see any benefit from this cut.
In a move to improve fairness for working households, the chancellor announced that the high income child benefit charge will be calculated based on household income rather than the current individual income basis by April 2026.
In the meantime, the charge threshold will increase to £60,000 from 6 April 2024 and the rate of the charge will be halved. As a result, child benefit will not be effectively fully repaid until an individual’s adjusted net income reaches £80,000.
The chancellor also announced a reform of the taxation of non-domiciled individuals, which was an area that the Labour party had previously expressed a desire to change.
The current system, which taxes individuals based on both their residence and domicile status, will be abolished from 6 April 2025, with the taxation of individuals being based solely on residency going forward.
Although not something mentioned in the chancellor’s speech, this may result in substantial changes to the UK inheritance tax regime from April 6, 2025.
Bad news for landlords
More bad news was in store for landlords as the chancellor announced that multiple dwellings relief, a valuable stamp duty land tax relief, would be scrapped from June 1, 2024.
The chancellor also announced that the advantageous tax regime for furnished holiday lets will be abolished from April 6, 2025, levelling the playing field between short-term and long-term letting businesses for unincorporated landlords of residential property.
For sales prior to April 6, 2025, FHL landlords may still be able to benefit from the 10 per cent capital gains tax rate on a sale due to the availability to business asset disposal relief.
Landlords looking to exit the property market have been offered a boost, due to what may be an attempt by the chancellor to raise short-term tax revenues, as the higher rate of CGT for residential property gains will drop from 28 per cent to 24 per cent from April 6, 2024.
The reduced higher rate of CGT on residential property gains may present an opportunity for landlords to incorporate their rental business at a lower-than-previously expected CGT cost.
Matthew Todd is associate director at RSM UK
