The Full Breakdown on the Spring 24 Budget
 | The Chancellor delivered his Spring 2024 Budget this week. There was quite a bit in it and I’ve tried to sum arise the key points below:
Bonus Guide IncludedInstead of hard copy tax cards, I have produced a downloadable budget guide which is included at the bottom of this blog. |
Corporation tax and capital allowances
Corporation tax remains at the upper rate of 25% and smaller companies will continue 19% with a rate of 26.5% applied to profits between £50,000 and £250,000.
There are some very complicated rules around owning multiple companies and accessing the lower rate so less is certainly more when it comes to controlling companies! The general rule is for small business owners to aim to control as few companies as possible to access more of the 19% rate so consider carefully how many companies you control!
Full expensing of plant and machinery is still available if you invest in your business
There are some very complicated rules around owning multiple companies and accessing the lower rate so less is certainly more when it comes to controlling companies! The general rule is for small business owners to aim to control as few companies as possible to access more of the 19% rate so consider carefully how many companies you control!
Full expensing of plant and machinery is still available if you invest in your business
Electric Cars
No changes were made to electric cars. They are still therefore worthy of consideration to run through companies but must be brand new to access the best tax incentives.
It is still of course fine to rent an electric car through the company as this can reduce profits that may otherwise be taxed at 26.5%.
It is still of course fine to rent an electric car through the company as this can reduce profits that may otherwise be taxed at 26.5%.
VAT Threshold
The VAT threshold will increase to £90,000 (£88,000 to de-register) – remember this is a rolling 12 month period not a calendar or business year and given recent inflation it is becoming much easier to hit this threshold! Don’t forget zero rated supplies like certain cold foods also count towards the £90k but don’t actually incur VAT and still mean you need to register
Personal Tax
The personal tax regime for 2024/25 will operate as follows:
- The personal allowance is frozen at £12,570 until 2028;
- The additional (45%) tax rate will now be payable on incomes of more than £125,140;
- A reduction in the dividend allowance to £500 from April 2024 – this will affect the vast majority of company owners and potentially introduce a lot more people to self assessment as dividends from stock market companies are not taxed at source
- Capital Gains Tax: a reduction in the annual exempt amount to £3,000 from April 2024
- Current pension contribution limits continue to apply
Holiday Lettings
Furnished Holiday lettings have historically been treated more favourably than residential lettings – amongst others, the key benefit has been being able to claim mortgage interest as an expense. This regime will be abolished and interest can no longer be deducted in the computation of the owners income. Relief is generally given as a tax reducer which can create unexpected tax consequences depending on other income so I would encourage owners to look at how this change affects the viability of their letting
National Insurance and Dividend Tax
Recent budgets have favoured changes in the rates of National Insurance and this was indeed no exception with rates being reduced by a further 2% meaning employees pay 8% and self employed people pay 6% from April 2024.
Historically linked to National Insurance, dividend tax has not been reduced and remains at 8.75% for basic rate tax paying Company Directors. This effectively means given a marginal 26.5% Corporation Tax rate and lower employee’s National Insurance, there might be some circumstances where its better to pay more salary and take less dividend if you can access the employment allowance and not pay and employers National Insurance. This of course gives the benefit of potentially reducing payments on account.
Historically linked to National Insurance, dividend tax has not been reduced and remains at 8.75% for basic rate tax paying Company Directors. This effectively means given a marginal 26.5% Corporation Tax rate and lower employee’s National Insurance, there might be some circumstances where its better to pay more salary and take less dividend if you can access the employment allowance and not pay and employers National Insurance. This of course gives the benefit of potentially reducing payments on account.
Car or Van?
Not related to the budget, there has been a lot of press coverage of twin cab pick ups recently.
HMRC initially announced they would tax these vehicles as cars which would generally increase the income tax on the P11D benefit significantly but following representations from various industries, this was subsequently reversed so it’s as we were – remember the primary purpose must be to carry goods, you must comply with the minimum weight carrying ability, and any adaptations to carry passengers risk the vehicle being taxed as a car!
HMRC initially announced they would tax these vehicles as cars which would generally increase the income tax on the P11D benefit significantly but following representations from various industries, this was subsequently reversed so it’s as we were – remember the primary purpose must be to carry goods, you must comply with the minimum weight carrying ability, and any adaptations to carry passengers risk the vehicle being taxed as a car!
Handy Budget Guide
Instead of hard copy tax cards, I have produced a downloadable budget guide which is available by clicking here
| Nigel_Gorski_Consulting_Guide_March_2024.pdf |
RSS Feed