This Spring Budget will be announced against a backdrop of plateaued economic growth, diminishing living standards and above target inflation. With an election on the horizon, the Chancellor will need to strike the right balance between remaining positive and optimistic while attempting to resolve the current economic position.
See our Spring Budget 2024 Predictions and Wish List for from our Private Client Team below.
Income tax
Tax Liabilities
Given the increased interest rates, more taxpayers will be benefitting from increased interest on income. This means more taxpayers may find themselves with undisclosed tax liabilities and/or needing to file a tax return.
Reduction in basic rate of income tax
There is a rumoured reduction in the basic rate of income tax by up to 2%. Again, this would be a welcome pre-election measure, however should we expect to receive this in phases.
Increased Income tax thresholds
Income tax thresholds have remained frozen since April 2022. Therefore, an increase in income tax thresholds would release UK taxpayers from the fiscal drag. Similar to the IHT reform above, this would be a welcome pre-election measure.
MTD for income tax
MTD for income tax is set to be implemented from April 2026. A deferment would be welcome, and if this is not possible, we would expect to receive more clarification on reporting rules.
Capital gains tax
There has been murmurs previously of aligning capital gains tax rates with income rates. However, this would cause an increase in tax for many.
VAT
The VAT threshold of £85,000 was last set on 1 April 2017. With rising inflation, it an increase in this threshold would support economic growth and help simplify admin and stimulate those trading on or around the VAT threshold, which is often seen as a disincentive to trade more.
What else can we expect from the Spring Budget?
ISA Investment threshold
The annual ISA investment threshold of £20,000 has been rumoured to see an increase. This may receive mixed reviews, as while generally positive, the question to be asked is how many members of the public have the ability to save £20,000 each year, so many will not benefit from this increase.
Child benefit charge
The high-income child benefit charge has penalised many households that previously would not have had this issue. The way in which the charge is drafted penalises up to 2.5m families. One proposal is to increase the threshold at which the charge becomes payable, which would be welcome.
Non-domicile regime
The non-domicile regime does not appear to be a key policy for the Conservative party, but a potential adjustment may bring forward the date on which a taxpayer becomes deemed domicile in the UK, which currently sits at 15 years of continued UK residence.
If you have any queries regarding the above, or would like to get in touch with us to discuss how the Spring Budget could affect you, contact us below: