Spring Budget 2024 – Acorn Business Consultancy

Most tax rates and allowances remain unchanged or have changed in line with announcements made in previous budgets.

Key changes:

A reduction in employees’ NI from 10% to 8% from 6 April 2024
A reduction in Class 4 NI for the self-employed from 9% to 6% and the abolition of Class 2 NI
Raising of the threshold for the High Income Child Benefit Charge which was surely overdue
Raising of the VAT registration threshold which was definitely long overdue

Personal Tax bands and rates

Personal allowance remains at £12,570
Basic rate of tax remains at 20%
Basic rate band frozen at £37,700 until April 2028
40% higher rate threshold remains at £50,270
For 2024/25, the point at which individuals pay the additional rate of 45% is £125,140

Tax on dividends

Dividend Allowance (pay 0% tax) reduced to £500 for 2024/25 (previously £1,000)
Dividends within the allowance still count towards an individual’s basic or higher rate band and so may affect the rate of tax paid on dividends above the Dividend Allowance
Dividends received above the allowance are taxed at the following rates for 2024/25:
- 8.75% for basic rate taxpayers
- 33.75% for higher rate taxpayers
- 39.35% for additional rate taxpayers
Corporation Tax due on directors’ overdrawn loan accounts is paid at 33.75% and remains unchanged.

Pension tax limits

A number of changes were made to the tax regime for pensions for 2023/24:

The Annual Allowance (AA) is £60,000.
Individuals who have ‘threshold income’ for a tax year of greater than £200,000 have their AA for that tax year restricted. It is reduced by £1 for every £2 of ‘adjusted income’ over £260,000, to a minimum AA of £10,000.
No Lifetime Allowance (LA) charge

The AA and threshold and adjusted income levels will remain the same for 2024/25.

High Income Child Benefit Charge (HICBC)

The HICBC is a tax charge that applies to higher earners who receive Child Benefit, or whose partner receives it.

Income threshold at which HICBC starts to be charged increased from £50,000 to £60,000 from April 2024.
The rate at which HICBC is charged will be halved from 1% of the Child Benefit payment for every additional £100 above the threshold to 1% for every £200.
- meaning that Child Benefit will not be withdrawn in full until individuals have ‘adjusted net income’ of £80,000 or more.

The government plans to administer the HICBC on a household rather than individual basis by April 2026, with a consultation in due course.

Employees and NICs

Following the Autumn Statement in 2023 the government cut the main rate of Class 1 employee NICs from 12% to 10% from 6 January 2024.

The government has further cut the main rate of Class 1 employee NICs from 10% to 8% from 6 April 2024.

The self-employed and NICs

The self-employed generally have to pay two forms of NICs: Class 2 and Class 4. Firstly, the government will amend Class 2 self-employed NICs from 6 April 2024. This means that, from 6 April 2024:

Self-employed people with profits above £6,725 will continue to get access to contributory benefits, including the State Pension, through a National Insurance credit, without paying NICs.
Those with profits under £6,725 and others who pay Class 2 NICs voluntarily to get access to contributory benefits including the State Pension will continue to be able to do so.

Corporation Tax rates

From April 2024:

Main rate – 25% on profits over £250,000
Small profits rate – 19% on profits of £50,000 or less
Profits between £50,001 – £250000 will be taxed at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.
- Marginal relief calculation: 3/200 (standard fraction) * (upper tax limit (£250,000) – company taxable profits)

VAT registration threshold

From 1 April 2024: