Spring Budget 2024: key insights for contractors from Kingsbridge Head of Tax

As the Spring Budget 2024 was announced last week, Andy Vessey , Head of Tax at Kingsbridge, brings forth a deep dive review to unravel its implications for contractors, freelancers, sole traders, and SMEs. This article aims to distil the key announcements and provide insights into the measures that could significantly impact the mentioned sectors.

The sole immediate announcement affecting the contracting market is found in the Budget Report at 5.42, titled 'Tackling non-compliance in the Umbrella Co. Market.' Andy Vessey mentions that the government plans to provide an update on the recent consultation on Tax Administration & Maintenance Day (due 18th April 2024)

Additionally, new guidance to support workers and other businesses using umbrella companies will be published in the summer.

The headline measures that may affect contractors are:

Reduction in NIC:

· Primary (employee’s) NIC will be reduced from 10% to 8% starting from 6th April 2024.

· Class 4 NIC, payable by the self-employed (excluding directors of PSCs), will be reduced from 9% to 6%.

· The average worker is expected to save ￡450, providing a welcome relief.

High Income Child Benefit Charge (HICBC):

· The threshold for HICBC will be increased from ￡50K to ￡60K from April 2024.

· The rate at which HICBC is applied will be halved, ensuring child benefit is not fully withdrawn until individuals earn ￡80K or higher.

· Andy Vessey notes that the government plans to administer HICBC on a household basis by April 2026, simplifying the process.

Non-Domiciles:

· The remittance basis of taxation for non-UK domiciled individuals will be replaced by a simpler residence-based regime from 6th April 2025.

· Individuals opting into the new regime will not pay UK tax on foreign income and gains in their first four years of tax residence, provided they have been resident for the last 10 years.

CGT – Residential Properties:

· From 6th April 2024, the higher rate of Capital Gains Tax for residential property disposals will be reduced from 28% to 24%.

· The lower rate of 18% remains for gains within an individual’s basic rate band.

· Andy Vessey mentions that this measure aims to encourage earlier disposals of second homes, benefiting the property market.

Furnished Holiday Lettings (FHL):

· Andy Vessey notes that the government will abolish the FHL tax regime from 6th April 2025.

· This move eliminates the tax advantage for landlords of short-term furnished holiday properties over those who let residential properties to longer-term tenants.

As the dust settles on the Spring Budget 2024, everyone that falls within the self-employed sphere is urged to stay informed about the changes that directly impact their financial landscape. Andy Vessey emphasizes, "Understanding these measures is crucial for businesses to adapt and thrive in the evolving economic landscape."

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