Missed Jeremy Hunt’s Spring Budget speech? We’ve got you covered with the key highlights.
Discover the latest Spring budget changes: lower Capital Gains Tax on homes, decreased national insurance rates, updated child benefit rules, and a raised VAT threshold. Stay informed with all the details…
Property Tax
The higher rate of Capital Gains Tax on residential properties is being reduced from 28% to 24% to encourage landlords and second homeowners to sell their properties.
This will benefit individuals, trustees, and personal representatives who are liable to pay Capital Gains Tax (CGT) on residential property gains. (If you sell or dispose of your main home and it’s your only residence, you don’t have to pay Capital Gains tax provided it has been your only or main home for at least a year).
This change, which takes effect on 6 April, is expected to boost the housing market by making a wider range of homes available and, therefore, helping more people get onto the property ladder.
Furnished Holiday Lettings Scheme Abolished
The Chancellor has decided to abolish the furnished holiday lettings scheme, which gives extra tax relief for costs incurred furnishing holiday lets that aren’t available to private rentals.
Under the current regime, there are special tax rules for rental income for properties that qualify as furnished holiday lettings (FHLs), such as being able to claim Capital Gains tax relief and profits counting as earnings for pension purposes.
The Chancellor said he would abolish multiple dwellings relief for people buying more than one property.
National Insurance Cuts
National Insurance for employed workers has been cut by 2p in the budget, from 10% to 8%, which the Chancellor claims will save the average person £450 a year.
The country’s 2 million self-employed workers also get a national insurance cut through a 2p reduction, bringing their national insurance payments down from 8% to 6%. The Chancellor predicts this will save the average self-employed worker around £650 compared to last year.
From 1 April, the VAT threshold (the total turnover) for businesses will increase from £85,000 to £90,000 to ‘reduce the administrative and financial impact of VAT.’
Child Benefit threshold changes
The child benefit earning threshold has changed. Currently, parents can claim child benefit to help with childcare costs, but if either parent earns over £50,000, they must start paying the high-income child benefit charge. From April, the threshold at which parents must pay the charge will be increased to £60,000.
Small Businesses Support
The Recovery Loan Scheme for small businesses will be extended for another two years. The scheme was launched in April 2021 to help businesses cope with the challenges faced during the pandemic.
Under the scheme, the government guarantees 70% of loans up to £2m to companies with a turnover of less than £45m.
Household Support
The Household Support Fund, which helps families with essential items like energy, water bills, and food, has been extended for another six months.
Fuel Duty
The 5p cut and freeze in fuel duty have also been extended until March 2025. The government predicts this will save drivers an average of £50 per year.
Inflation Target & Interest Rates
The Office for Budget Responsibility (OBR) has reportedly confirmed that inflation will fall to the target of 2% a year earlier than previously expected. We hope this will mean good news for interest rates.
While we can’t predict for sure what will happen, we hope that fixed-rate pricing will start coming down again soon. These reductions will likely be gradual and less extreme than those we saw at the end of last year. We will keep you posted on any critical changes to interest rates.