With the improvement in the economy, the government has planned to cut taxes to help individuals and boost growth. The Spring Budget 2024 confirms the government’s commitment to its plan. It explains how tax changes, especially to National Insurance, will affect different professions nationwide.
Below you will learn about the tax cuts in property, national insurance cuts, Reforms to HICBC, and Tax reliefs for creative industries. Staying aware of these updates helps people better handle their financial management. By staying informed, you can avoid unexpected tax liabilities; leverage the benefit of potential savings, and better plan for your financial future.
Who Pays National Insurance?
National Insurance is the money paid by people aged 16 to the state pension age. It implies if you earn over £242 per week from a job or if you’re self-employed and make more than £12,570 a year.
Who pays HICBC tax?
The HICBC High Income Child Benefit is a tax higher earners must pay if they or their partner get Child Benefit.
The Major Tax Cuts in National Insurance
The government has made more changes to National Insurance, a relief in taxes. This is good news for professionals who work in different fields. It was started on 6 April 2024, the government is reducing the main rate of national insurance by 2p. That means if you earn money from a job, you’ll pay less tax.
If you’re self-employed, you’ll also pay less tax. The government is cutting self-employed National Insurance by 2p, on top of the 1p cut announced before. This means self-employed people will save money too. For example, if you’re a self-employed person who earns around £28,000 a year, you’ll save £650 each year. That’s a lot of money! Moreover, you can also seek assistance from accounting services professionals in gaining the full spectrum of available tax reliefs.
Here is the main update;
- In a hardworking family in which there are two earners and their average salary is £35,400 then each will have £1,826 more money.
- Junior doctors who earn £65,000 in a year will save £1,508.
Tax Reliefs For Families With Children:
The government has made some beneficial changes that help families with kids, especially with Child Benefit. It is starting from April 2024, families won’t lose their Child Benefit until they earn £60,000 or more, instead of £50,000. This means more families will get to keep their Child Benefit money.
The government will take less money from Child Benefit. Before, they took 1% for every £100 earned above £50,000. Now, they’ll only take 1% for every £200 earned above £60,000. So, families won’t lose all their Child Benefits until they earn £80,000 or more.
These changes will help lots of families. Almost half a million families will get about £1,260 extra each year to help with raising their kids. And 170,000 families won’t have to pay any tax on Child Benefit at all.
The government has a clear idea that some people think the current way they tax Child Benefit isn’t fair. For example, families in which two people are earning £49,000 each do not have to pay tax, but a single parent who is earning over £50,000 will pay tax.
To make things fairer, the government plans to change how they tax Child Benefit. By April 2026, they want to tax it based on the whole family’s income, not just one person’s. They will talk more about this soon.
With these changes, families across the UK will have more money to take care of their children and pay for things they need. So they can better plan their finance management.
New Tax Reliefs for Creative Industries:
The introduction of new tax reliefs for the creative industries is a positive change for professionals in this field. Artists, designers, and content creators can now benefit from better financial support that inspires them to be more creative and innovative.
40% Relief from Business Rates for Eligible Film Studios: The goal of this relief is to support film production by providing a substantial reduction in business rates for qualified film studios in England for the next decade.
Introduction of a New UK Independent Film Tax Credit: This new tax credit is envisioned to incentivize independent film production by giving financial care to eligible projects.
Increase in Tax Credit Rate for Visual Effects Costs: The tax credit rate for visual effects costs in the Audio-Visual Expenditure Credit is increased by 5%, and the 80% cap on these costs is removed. This change aims to further support visual effects companies and encourage investment in this sector.
Permanent Extension of Tax Relief for Theatres, Orchestras, Museums, and Galleries: Tax relief for these cultural institutions is made permanent, providing ongoing financial support for their activities.
Funding for Upgrading National Theatre’s Stages and Infrastructure: £26 million in funding is provided to upgrade the stages and infrastructure of the National Theatre, supporting its operations and enhancing its facilities.
Real Estate Tax Updates
Previous Law:
- According to current law, if you sell a house and make money from it (a gain), you might have to pay CGT called Capital Gains Tax.
- If the house didn’t qualify for Principal Private Residence Relief (PRR), you would pay CGT.
- If you’re a normal taxpayer, you’d pay 18% or 28% CGT, depending on how much money you made from the sale and if you’re in a higher tax bracket.
- If you’re in a higher tax bracket, you’d pay 28% CGT on all the money you made from selling the house.
- If you’re a trustee or personal representative (like an executor of a will), you’d always pay 28% CGT on any money made from selling a house.
Changes:
- There’s a new plan to change the CGT rates for people selling houses.
- The government wants to reduce the 28% CGT rate to 24% for everyone, including trustees and personal representatives.
- The lower tax rate of 18% will stay the same.
- But if you’re selling something called “carried interest,” the CGT rates won’t change.
Growth Prospects & Fiscal Outlook
Positive Growth Projections and Fiscal Responsibility Measures:
The 2024 tax updates show positive growth and fiscal responsibility measures, signifying a stable economic environment for professionals to operate in. Despite tough times from things like COVID-19 and high prices, the UK economy is holding up. The government’s plans, mentioned in the Spring Budget, are about things like making prices go down, helping the economy grow, and reducing the country’s debt.
The budget shows progress in these areas, with prices falling, the economy doing better than expected, and the country’s debt predicted to go down. This means the government can give more tax cuts to working people while still being careful with money. With a focus on enhancing economic growth, accounting and bookkeeping services can play a pivotal role in guiding clients toward maximizing tax savings.
Conclusion:
To sum up, the Spring Budget 2024 brings good news for multiple sectors but specifically for small businesses, contractors, health clinics and creative industry as the Government is making taxes lower to help people around the country in multiple sectors. From less National Insurance to better support for families, artists, and home sellers, these changes aim to make life easier. By knowing about these updates, we can make smarter money choices and build a better tomorrow for ourselves and our families. If you have any financial concerns, do not hesitate to contact us.