Spring Budget 2024

The UK Chancellor’s Spring Budget Announced Several Measures To Cut Tax and Generate Long Term Growth

On 6 March 2024, the UK Chancellor announced the Spring Budget with the stated aim to deliver lower taxes, more investment and better public services. The announcements included several headline policies focussed on the taxation of individuals rather than businesses. With a general election expected shortly, policies targeted at voters were to be expected. The policy decisions announced reflect costings and savings for fiscal years from now until 2028-29. If there is a change in government following the election, then some of the Spring Budget announcement may be short-lived.

Key developments announced include:

  • Further reduction in Employee National Insurance Contributions for employees and self-employed individuals;
  • Changes in taxation rules of individuals domiciled outside the UK (so-called non-domiciled individuals or “non-doms”) effective from 6 April 2025;
  • Abolishment of stamp duty land tax Multiple Dwellings Relief from 1 June 2024;
  • Increase in VAT registration threshold from £85,000 to £90,000 from 1 April 2024;
  • For companies, there is no change in the main corporation tax rate of 25% and the widely anticipated capital allowances extension to full expensing for leasing will be subject to further consultation.

Employment Tax and Reward

Further reduction in Employee National Insurance Contributions (“NICs”) Following the previous...

Further reduction in Employee National Insurance Contributions (“NICs”)

Following the previous reduction in the 2023 Autumn Statement, and as very widely publicised in advance, the Chancellor announced a further reduction in the main rate of Class 1 primary NICs (the contributions paid by employees) from 10% to 8%, effective 6 April 2024. There is no change to the rate paid on earnings above the “Upper Threshold” by higher earners (which remains at 2%), nor to Class 1 secondary NICs (the contributions paid by employers).

Effective marginal tax rates for employees, including employee NICs, will broadly be 28% (basic rate), 42% (higher rate), and 47% (additional rate).

The Chancellor announced an intention to further reduce employee NICs when possible.


This move will benefit most employed earners, saving up to around £750 per year for higher earners. It is worth noting that when taxes on employed people are raised it is usually done via NICs due to the lower level of understanding in how NICs work compared to headline rate of income tax – therefore, it is likely that a cut to the rates of NICs may not be as popular as a cut to income tax rates.

The published Office for Budget Responsibility forecasts demonstrated that the ‘fiscal drag’ caused by the previous (and ongoing) freezing of tax allowance and rate band thresholds resulting in extra tax payable by many individuals (with four million expected additional income taxpayers by 2028-29, and three million more higher rate taxpayers by the same date) far outweighs the limited ‘good news’ for employees of this NICs cut.

Although the Chancellor has signalled his intention to further reduce employee NICs it currently looks unlikely that he will be in government to give effect to that.

Taxation of Non-Domiciled Individuals

The Chancellor announced that the current rules for individuals whose long-term home (their “domicile”) is outside the UK (so-called non-domiciled individuals or “non-doms”) will be abolished. This will be replaced with a new regime based on tax residence status with effect from 6 April 2025.

Under the new regime, if an individual has been tax non-resident for at least ten consecutive tax years, then when that individual becomes UK tax resident they will not pay UK tax on overseas income and gains for the first four tax years in which they are resident. Thereafter they will pay tax on their worldwide income and gains (in the same manner as those previously referred to as UK domiciled).

During the period during which individuals are exempt from UK tax on their overseas income and gains they will be able to bring this into the UK without incurring additional tax. This is a sharp change from the current rules which would tax these remittances to the UK.

Overseas workday relief which, broadly, allows current non-doms to exclude income from non-UK workdays from tax in the UK for their first three years of being UK tax resident (subject to certain structuring requirements) will be retained and simplified under the new regime (including removing the requirement to keep those earnings outside of the UK).

For current non-doms there will be transitional arrangements, which will include the ability for a two-year period to bring to the UK their overseas income and gains.

No decision has yet been made on the implications for inheritance tax, and a consultation is expected.


The Chancellor claimed to have looked at this issue for ‘many months’, despite recently having publicly stated his disagreement with any plans to do so.

The removal of the ‘remittance basis’ of taxation will be welcomed by many. Not only will this drastically simplify tax compliance for impacted individuals, but it should follow that encouraging individuals to bring their overseas wealth to the UK increases spending (and, as a result, consumption taxes like VAT) in the UK economy.

The simplification of overseas workday relief, and the scrapping of the requirement to keep impacted earnings outside of the UK, is similarly welcome news which should also help simplify practical payroll matters for UK employers (who may currently have to split payroll payments into UK and overseas bank accounts to allow eligible individuals to make use of the relief).

As is often the case with simplification, some additional complications are expected. The transitional arrangements for current non-doms include such complications, namely a re-basis of capital assets to 5 April 2019 and partial exemptions for remittances of foreign income and gains. Individuals who are impacted will need to take a detailed look at their affairs to plot the best course of action.

Capital Gains Tax (“CGT”) Rates for Residential Property (but Not Carried Interest) Reduced

The higher rate of CGT payable on disposals of residential property (currently 28%) will be reduced to 24% whilst the lower rate (currently 18%) remains unchanged.

It was confirmed that the higher carried interest rate will remain at 28%.


It is not surprising that even with a reduction in the top rate of CGT applying to residential property, carried interest CGT rates will still be 18% and 28%. However, this will now mean that there are three higher rates of CGT depending on the underlying nature of the asset – 28% for carried interest, 24% for residential property, and 20% for everything else – adding further complications to the UK’s tax laws.

High Income Child Benefit Charge (“HIBC”) Threshold

The threshold will be increased from £50,000 to £60,000 and the top-end of the tapering will increase to £80,000. The government plans to administer this on a household basis by April 2026 and will consult on this in due course.


Whilst not strictly a tax, many employed earners take into account the impact of the HIBC when considering their marginal tax rates. This change will go a little way to assuaging the high marginal tax rates that can apply where the HIBC is in point. The proposed change to a household basis from April 2026 is welcome provided it achieves the intended fairness.

Other Measures

Some additional items of interest to employers may include:

  • As expected, there was no change to the personal allowance reduction, meaning that the marginal income tax rate applicable to earnings between £100,000 and £125,400 remains 60% (before dropping to 45% for earnings in excess of £125,400).
  • The government will provide an update on tackling non-compliance with tax laws in the umbrella market (arrangements through which non-employee contractors are often engaged) shortly.
  • The current Transfer of Assets Abroad (“ToAA”) rules are to be strengthened from 6 April 2024 to prevent individuals from using a company to bypass the current ToAA rules.
  • The furnished holiday letting rules will be abolished from 5 April 2025. This is intended to eliminate the tax advantages of letting property on a short term letting compared to longer term letting.

Corporation Tax

Capital Allowances At the 2023 Autumn Statement, the government announced that temporary first year allowances...

Capital Allowances

At the 2023 Autumn Statement, the government announced that temporary first year allowances available for qualifying expenditure on plant and machinery (known as ‘full expensing’) would be made permanent. Under the full expensing regime, companies may claim a deduction from their taxable profits in the year qualifying expenditure is incurred at a rate of 100% for main pool additions and 50% for special rate pool additions. However, full expensing currently only applies to companies investing in machinery for their own use.

The government announced during the Spring Budget that a technical consultation on extending full expensing to assets used for leasing “when fiscal conditions allow” including draft legislation will be released shortly.


The exclusion of assets used for leasing when full expensing was introduced was anomalous and therefore the announcement is to be welcomed. As businesses continue to grapple with inflationary pressure on costs, the extension of full expensing to leasing will, once implemented, provide some relief by removing a barrier to acquiring assets in a cost-effective manner.

Corporation Tax Rate and New Reliefs

The corporation tax rate shall remain at 25%. The Chancellor announced welcome changes to corporation tax related reliefs for the film and cultural sectors.

In relation to British independent film producers, the Government is introducing a new UK Independent Film Tax Credit at a rate of 53% for films with budgets under £15 million that meet the conditions of a new British Film Institute test. There will also be a 5% increase in tax relief for UK visual effects costs in film and high-end TV, under the Audio-Visual Expenditure Credit (“AVEC”).

From 1 April 2025, the rates of Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Exhibition Tax Relief will be permanently set at 40% (for non-touring productions) and 45% (for touring productions and all orchestra productions). The sunset clause for museums and galleries relief will be removed making it a permanent tax relief.


With a general election on the horizon, the focus of the Spring Budget was expected to be on personal taxation. The retention of the 25% rate of corporation tax is therefore in line with expectations. The changes to film and cultural tax reliefs will further strengthen the competitiveness and attractiveness of the UK for these sectors.

Indirect Taxes

VAT The VAT registration threshold will be increased from £85,000 to £90,000 from 1 April 2024.


The VAT registration threshold will be increased from £85,000 to £90,000 from 1 April 2024. To correspond with this, the deregistration threshold will also increase from £83,000 to £88,000.


This is the first increase in the VAT registration threshold in seven years – the threshold has been £85,000 since 2017. As highlighted by the Chancellor, this would help “tens of thousands” of businesses. This is true for those trading just under the current registration threshold of £85,000 and deliberately limiting their expansion to prevent registering for VAT (likely because of an inability to pass on the cost of VAT to customers). Increasing the threshold by £5,000, whilst encouraging for small business owners that are just below the current threshold, impacts a relatively small number of businesses and might only shift the point at which the ‘bunching’ occurs.

Stamp Duty Land Tax (“SDLT”)

The government has announced that Multiple Dwellings Relief (“MDR”), which provides relief from SDLT for transactions involving the acquisition of multiple ‘dwellings’ (e.g. a block of flats) by enabling the tax payable to be determined by reference to the average consideration payable (rather than on a unit-by-unit basis), will be abolished from 1 January 2024. Property transactions with contracts that were exchanged prior to 6 March 2024 will continue to benefit from the relief irrespective of the date on which the contracts will complete.

SDLT applies to transactions involving land in England and Northern Ireland and therefore it is not clear at this stage whether the equivalent reliefs from Land and Buildings Transaction Tax (“LBTT”) in Scotland and Land Transaction Tax (“LTT”) in Wales, responsibility for which is devolved to the Scottish and Welsh administrations, respectively, will be abolished.


The abolition of MDR means that the majority of acquisitions of multiple dwellings will be subject to SDLT at the 5% commercial rate in future (provided at least six dwellings are acquired in the same transaction or via linked transactions).

This relief was mainly of benefit for student accommodation acquisitions (potentially reducing the rate of SDLT from 5% to 1%) and this change may lead to an increase in the number of student accommodation transactions being implemented by way of a share deal.

Although the relief also applied to investors in the private rented sector (“PRS”), MDR usually had less benefit due to the average price of a ‘dwelling’ and because of the additional rates of SDLT that apply to corporate and non-UK owned purchases. Accordingly, it is anticipated that this change will have limited impact for PRS.


Reserved Investor Fund (“RIF”) As part of its ongoing review of the UK’s funds regime, the...

Reserved Investor Fund (“RIF”)

As part of its ongoing review of the UK’s funds regime, the government has announced that it will legislate for the introduction of the RIF in the Spring Finance Bill 2024 (with the date of implementation yet to be confirmed).

The RIF is a new unauthorised contractual scheme that is intended to complement the existing mix of fund regimes available and make the UK a more attractive location for establishing funds by offering a regime that provides more flexibility than the existing UK Co-ownership Authorised Contractual Scheme (“CoACS”) and an alternative to setting up offshore via vehicles such as Jersey Property Unit Trusts (“JPUTs”), whilst offering a similar tax regime. The RIF is expected to be particularly suitable for investment in UK commercial real estate, although it will also be relevant to other asset classes across private and public markets.


The announcement makes it clear that the RIF is now to be enacted following several years of campaigning from certain industry representatives. Whilst the RIF is designed to encourage fund managers who wish to invest in commercial property (amongst other asset classes) to do so in the UK, it is currently unclear whether the RIF will deliver enough of a benefit in comparison to existing fund structures to stimulate the desired take-up.

Energy (Oil and Gas) Profits Levy (“EPL”)

The government has announced that it will extend the Energy Profits Levy (EPL), a temporary 35% tax on the exceptional profits earned by companies from the production of oil and gas, by one year from 31 March 2028 to 31 March 2029.

It also announced that it will introduce legislation in Spring Finance Bill 2024 to provide for the Energy Security Investment Mechanism (“ESIM”). The detail and application of the ESIM were announced in a Technical Note at Autumn Statement 2023.


Whilst the EPL has been extended, the implementation of the ESIM will ensure that the EPL ceases if oil and gas prices return to historically normal levels. This will provide the oil and gas sector and its investors more confidence in the fiscal regime while the EPL remains in place, supporting current and future investments.

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