A budget for Growth?

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A budget for long-term growth, was this just hot-air or did it really ring true for business owners? Jeremy’s opening comments of wanting to showcase permanent tax cuts for families and being a budget for growth, but what did this really mean, and did he actually achieve it:

The headlines:

Income Tax

  • If you’re a saver – you can now look to increase your tax free ISA by looking at investing into the British ISA! British ISA has been introduced which means you can invest an additional £5,000 in a specific ISA on top of existing ISA allowances to invest in British businesses
  • If you are not domiciled in the UK, so home is not considered to be in the UK, but you are resident here – the rules are set to change. With new Residency rules and abolishing the old system – these new amendments will be in place from April 2025 coming to the UK with transition arrangements for existing situations.

Property

  • If you own properties personally – If you hold properties personally and rent them out and claim Furnished Holiday lettings relief – then unfortunately this is being abolished, so it’s a good time to consider how you hold your properties – is now a good time to  look to move them into a limited company, hold them personally, or with the capital gains rate going down, get rid of them – although of course your investment strategy shouldn’t be guided by tax.
  • If you’re looking at purchasing a property and a Granny Annex/basement flat – Abolished Multiple Dwellings relief – this was a stamp duty relief, only available if you were buying a block of flats or frequently referred to as ‘Granny Annex Relief’.
  • Reducing the higher rate tax charge on Capital Gains – where your total income is below £50,270 and your gain falls under this figure too, you are taxed on capital gains at 18%, but this increases as your total income and gain go over this figure, previously the rate of tax was 28% but now this has been reduced to 24%.

National Insurance

  • Employee National Insurance from 6 April will reduce further from 10% to 8% saving employees on average £450
  • And for sole-traders, the national insurance for Class 4 was set to reduce to 8% from 6 April (from 9%) but now is to reduce to 6% – this means for a sole trader earnings profits of £50,000 there will be just over £1k in your back pocket.
  • If you’re a small business and do not need the legal protection of a limited company it may be time to consider disincorporation, or hang on a little longer before you turn into a limited company (from a tax angle only!).

For Families:

  • Child benefit charge has always raised a few eyebrows, triggering questions as to why if two partners are earning £49,000 each, and yet a separate household earns £52,000 and £nil – why they have to suffer by paying the Child Benefit High Income Tax Charge – effectively paying back some of the child benefit that they have claimed. 
  • They are looking at a new regime to introduce to look at household income and introduce this in April 2026, but to make the step easier, they are raising the income earnings to £60,000 ahead of the charge being charged, and
  • They’ve also slowed down the speed in which you pay this back over, so instead of paying £100 for every £1,000 earnt over £50k you will pay back £100 for every £2,000 over £60k.

VAT:

  • The VAT threshold is to increase to £90,000 – although this rate hasn’t been touched since 2017/18 and so should have been increased even further to reflect inflationary changes, and would have welcomed this increasing to over £100,000.

Other tax reliefs:

  • Fuel duty and alcohol duty has been frozen
  • Business flights will increase in tax
  • There are enhanced reliefs for the creative industries, including Museum, film, TV and theatre businesses.
  • The full expensing relief for additions this has been extended to include leased assets

Jeremy indicated he wanted to introduce a simpler and fairer tax system for earnings. It is clear, that this wasn’t a budget that benefited the business owner. While small businesses are the backbone of the UK economy, I’m struggling to see from a business owner perspective how this is going to ignite growth, although business owners are tenacious and tax isn’t going to be something to stop us!

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