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Keith Senior, of Bury St Edmunds accountants Jacobs Allen, takes a look at Wednesday’s Budget





There are many comments that could be made about the Budget announcements on Wednesday, but I’ll restrict myself to identify some of the measures and give some commentary about the impact.

First of all, many of the announcements were consultations or future changes, rather than immediate changes from April 2024; there is the possibility that this government may not be in power to see them through. Also, there might not be time within the parliamentary schedule to get all measures voted through before the next General Election.

So it seems that this could be seen in part as a political budget rather than one making such significant changes as expected.

Keith Senior, director at Jacobs Allen
Keith Senior, director at Jacobs Allen

The following are measures as consultations or have further details to be announced, not capable of being passed into law soon:

- The High Income Child Benefit Charge (HICBC) changes, as to how they will operate and determine ‘household income’

- Abolition of the ‘non-dom’ status from 2025 and how the transitional measures will operate.

Abolition of the Furnished Holiday Lettings (FHL) regime from 2025

Those measures that are to have immediate effect (from April 2024) are:

- Transition by changing the cut-off levels for the HICBC to £60,000

- Reduction of 2% in National Insurance (NI) contributions for both Class 1 for employees up to the High Rate limit (worth a maximum of £750 a year) and Class 4 self-employed

- Capital gains tax (CGT) reduction for the higher rate element of gains on residential property disposals from 28% to 24%, requiring the exchange of contracts to be after 5 April 2024

- VAT registration threshold increasing from £85,000 to £90,000

It appears that there is some different thinking about property strategy at work here. Both measures of abolishing FHL relief and reducing CGT on residential property sales should free up some more property into the market. But the problem with shortage of property to rent could become more acute and drive rents higher. The FHL regime was brought in to encourage tourism that adds significantly to the economy of those holiday areas and its abolition could deprive those areas of economic activity if there is a shortage of accommodation.

Increase in VAT registration is less than inflation and can still cause a cliff-edge where a trader reduces activity to not go over that threshold

The moves to help with HICBC and the cut in employee NI could be targeting younger voters, who are not the government’s natural supporters, so this could be seen as a political move.

Finally what didn’t feature were any changes to CGT business asset disposal relief and stamp duty on share transactions, or inheritance tax, so there should be no impact on business sales and acquisitions, which should be buoyed by the reported increased growth and reduction in inflation, with hopefully lower interest rates.

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-- Keith Senior, Director, Jacobs Allen Chartered Accountants