On Wednesday 6 March, Chancellor Jeremy Hunt announced the Government’s proposals for new financial policies, which are set to take effect from April 6, 2024.
Mr Hunt announced the Government’s intention to launch a new type of individual savings account (ISA) that focuses only on UK investments.
Part of the proposal for the UK ISA is to allow an extra £5,000 of tax-free savings on top of the standard £20,000 annual ISA allowance.
This means you could save up to £25,000 tax-free whilst investing in the UK, which is hoped to boost the economy.
While the Government is still consulting on the details of this new ISA, you may wish to organise your finances now so that you can take advantage of it as soon as it launches.
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Changes to taxes
Mr Hunt proposed several changes to taxes across many different areas, from personal to property to business.
Personal taxes
While income tax thresholds will remain the same, Mr Hunt plans to cut National Insurance contributions from 10 percent to eight percent from April 6. Class 4 contributions for the self-employed will also be cut from eight percent to six percent. M Hunt claims it will benefit 27 million people, saving the average worker £450 per year.
Mr Hunt also proposed axing the non-domicile tax status in April 2025, which allows UK residents whose permanent home is elsewhere to only pay UK tax on income made here.
The Government intends to implement a residence-based regime instead, which they believe will generate more tax revenue and be fairer.
Property-related taxes
Mr Hunt plans to abolish tax breaks for second homeowners who let out property short-term to holidaymakers from April 2025, ensuring short- and long-term lets are treated the same for tax purposes.
The Government will be reducing capital gains tax on residential property from 28 percent to 24 percent starting on April 6, 2024, making it cheaper for landlords to sell their properties.
They also proposed to abolish multiple dwellings relief for stamp duty from June 2024, not only impacting landlords but also anyone who wishes to buy a home with an annexe (a second building away from the main house) typically used to care for ageing parents.
VAT for small businesses
To support small to medium-sized enterprises, the Government is increasing the VAT registration threshold from £85,000 to £90,000 from April 1, 2024, which they estimate will benefit more than 28,000 businesses.
Changes to tax policies can be confusing
Speaking to a chartered accountant about your situation – whether business or personal – can ensure you’re always paying the right tax.
What should I do next?
When the Government proposes new policies, it’s wise to speak with a professional to ensure you’re always maximising your money’s potential.
Here’s how you can find the right expert for the job:
- Fill in Unbiased’s short survey describing your situation and goals.
- Unbiased will find the expert best suited to your needs in our database of 27,000 professionals.
- Your expert will get in touch with you to arrange your free consultation.
For anyone looking for additional free financial planning services, MoneyHelper offers impartial advice backed by the UK Government.
It offers money and pensions guidance online, over the phone or in person and can connect people to a free debt adviser.
Citizens Advice also offers free advice on debt, benefits, housing, legal matters, employment and general consumer advice. People can reach them online or by phone from Monday to Friday.
VouchedFor has a network of over 5,500 independent and restricted financial advisers to help people find trusted and qualified professionals for their financial planning needs. People can request a free over-the-phone or face-to-face financial health check.
