SafeRec – A major milestone in commitment to excellence and compliance

We’re excited to share some fantastic news with our community: SG Umbrella is now officially SafeRec Certified!

This accomplishment is the result of an extensive and rigorous audit process, and it signifies our unwavering dedication to maintaining the highest standards of compliance and operational excellence in the umbrella industry. SafeRec Certification is not just a milestone—it’s a reflection of our commitment to transparency, accountability, and the continued trust of our clients, employees and the agencies we work with.

What does SafeRec certification mean for SG Umbrella?

Achieving SafeRec Certification is a significant achievement for SG Umbrella. It assures our clients, employees, and partners that our processes meet the stringent requirements set by SafeRec, an industry-leading regulatory body. This certification demonstrates that we operate with transparency and uphold the highest standards of governance.

The SafeRec audit process is thorough, evaluating all aspects of our operations to ensure that we meet key criteria related to compliance, risk management, and employee welfare. This certification highlights our ongoing efforts to create a safe, fair, and accountable environment within the umbrella market.

Why this matters to our agency partners and stakeholders

As the umbrella industry continues to evolve, the importance of compliance and regulatory adherence grows stronger. By becoming SafeRec Certified, SG Umbrella reinforces its position as a trusted, reliable provider committed to not only meeting, but exceeding industry standards.

For our employees, this certification further affirms our commitment to creating a supportive and compliant workplace where transparency and accountability are always top priorities.

A huge thank you to our team and partners

This achievement wouldn’t have been possible without the dedication and hard work of our incredible team, as well as the unwavering support of our partners. Together, we’ve achieved something truly remarkable, and we look forward to continuing to raise the bar in the umbrella industry.

We’re just getting started!

While this certification is a huge milestone, it’s only the beginning of our journey toward even greater success. SG Umbrella will continue to prioritise compliance, innovation, and excellence in all that we do.

Thank you once again to everyone who has supported us along the way. Here’s to a bright future, with even more milestones to come!

Forty billion pounds of tax rises represents one of the very largest tax rising Budgets outside of a time of recession, with Rachel Reeves announcing a compendium of changes aimed at businesses and higher tax payers. A penny off a pint and frozen fuel duty will be small comfort for some, with the following headlines affecting contractors and small business owners in the UK. (Don’t forget to follow our socials for more detail in the coming days.)

National Living Wage

Minimum wages will rise in April 2025, with rates for over-21 is set to go up from £11.44 to £12.21 an hour. For 18 to 20-year-olds, the minimum wage will rise from £8.60 to £10. The government will be working towards a single adult rate over time.

Apprenticeship wages will go up from £6.40 to £7.55 an hour.

Employers National Insurance contributions

Employers’ National Insurance contributions will rise from 13.8% to 15% from April 2025.In addition, the threshold at which businesses start paying National Insurance on a workers’ earnings will be lowered from £9,100 to £5,000. To protect smaller businesses, the employment allowance will increase from £5,000 to £10,500.

There will be no changes to employee NI, VAT or income tax. In addition, there will be no extension of the freeze in income tax and National Insurance thresholds beyond the decisions of the previous government meaning that from 2028-29, personal tax thresholds will be uprated in line with inflation.

Business Asset Disposal Relief

Business Asset Disposal Relief will remain at 10% for the remainder of the year, then increase to 14% from 25/26 and then 18% from 26/27 onwards. The lifetime limit will remain at £1 million.

Capital Gains Tax

Capital gains tax will increase to 18% on lower rate and 24% on higher rate immediately. This tax is charged on profits which are made from selling assets, such as investments, including shares. The lower rate of Capital Gains Tax will rise from 10% to 18%, and the higher rate from 20% to 24%.

On the sale of second residential properties, CGT will remain at 18% and 24%.

Inheritance tax

The budget will extend the inheritance tax threshold freeze for a further two years to 2030. That means the first £325,000 of any estate can be inherited tax-free, rising to £500,000 if the estate includes a residence passed to direct descendants, and £1m when a tax free allowance is passed to a surviving spouse or civil partner. Inherited pensions will be bought into inheritance tax from April 2027.

Electric Vehicles

The Budget will maintain existing incentives for EVs in company car tax from 2028. It will also increase the differential between fully electric and other vehicles in the first rates of Vehicle Excise Duty beginning in April 2025.

Non-Dom

The government will abolish the non-dom tax regime and remove the “outdated concept” of domicile from the tax system from April 2025.

This applies to a UK resident whose permanent home – or domicile – for tax purposes is outside the UK. It means they do not pay UK tax on money they make elsewhere in the world. A new, residence-based scheme with “internationally competitive arrangements” for those coming to the UK on a temporary basis will be introduced. The Office for Budget Responsibility say that this package of measures will raise £12.7bn over the next five years.

Stamp Duty

There will be an increase in second homes stamp duty from 3% to 5%

Schools

VAT will be introduced on private school fees from January 2025, and that the government will also introduce legislation to remove their business rates relief from April 2025.

Pensions

2025/26 uprated by 4.1%

That will follow a government commitment to the triple lock. Spending on the state pension is projected to rise 4.1% in 2025-26 – that is a £470 increase for over 12 million pensioners in the UK, Reeves says.

The Budget 2024 – Full Report

The Chancellor of the Exchequer, Rachel Reeves came to Parliament to deliver her first Budget.

The Chancellor’s stated aim with this Budget was to “fix the foundations and deliver change” and “invest, invest, invest”. To do this there would be a need to raise an additional £40 billion in taxes.

Here are some of the main announcements from the UK Autumn Budget.

Personal Tax

The Labour Government will retain the Personal Tax Allowance and Basic rate band announced by the previous Government until 2028, after which they will increase with inflation. Personal allowances will still be reduced by £1 for every £2 a person’s income exceeds £100,000.

UK Income Tax Rates (except Scotland)

Band	Taxable income	2025/26	2024/25
Allowance	£0 to £12,570	0%	0%
Basic	£12,571 to £50,270	20%	20%
Higher	£50,271 to £125,140	40%	40%
Additional	Over £125,140	45%	45%

It is worth noting the Scottish Parliament has had the power for a number of years to vary the tax rates and thresholds of Non-Savings, Non-Dividend income for Scottish taxpayers. The differential between Scotland and the rest of the UK in this respect has grown quite significantly.

The Wales Act 2014 gave the National Assembly of Wales the power to vary the tax rates in respect of Welsh resident taxpayers as regards Non-Savings and Non-Dividend income. However, to date they have continued to set income tax rates in line with those announced by the UK Government. The Welsh Government will publish their draft budget on 10th December 2024.

Scottish Tax Rate Bands

The Scottish Budget is set for 4th December 2024. The Scottish Parliament have previously announced the tax rates and thresholds for Scottish Taxpayers for the tax year starting 6 April 2024.

Scottish tax rates 2024/25 for non-savings, non dividend income

Band	Taxable income	2024/25
Allowance	£0 to £12,570	0%
Starter rate	£12,571 to £14,876	19%
Basic rate	£14,877 to £26,561	20%
Intermediate rate	£26,562 to £43,662	21%
Higher rate	£43,663 to £75,000	42%
Advanced rate	£75,001 to £125,140	45%
Top rate	Over £125,140	48%

Tax tip

If you are a sole trader or property landlord and your turnover exceeds £50,000 during the 2024/25 tax year you may fall under Making Tax Digital for Income Tax rules from April 2026 which includes quarterly reporting. If you are both a sole trader and a property landlord then aggregate the two turnovers together when applying the £50,000 threshold. Are you ready for this? If not we can help.

Options to consider to defer the MTD compliant requirement might be creating a partnership or incorporating the business.

National Insurance

The Chancellor retained the current rates of National Insurance paid by employees, as well as rates for the self-employed will remain the same.

From 6 April 2025, Employers National Insurance will increase to 15% from the current 13.8%. The limit from which Employers National Insurance is due will reduce from £9,100 per employee to £5,000 until 5 April 2028.

Tax tip

It is worth reviewing your NIC records at least every 5 years, whilst it is fresh in your memory, to ensure they are correct and up to date. National Insurance contributions protect your rights to certain state benefits and contribute towards your state pension.

Tax tip

If you have more than one employment you may pay too much employees national insurance. HM Revenue & Customs can request the second employer to operate a lower rate to ensure the correct amount is paid. Refunds may be possible if national insurance has been overpaid in earlier years.

In addition Class 1A National Insurance will increase to 15%. This rate is payable by employers on certain benefits provided to employees.

The Employment Allowance will increase from £5,000 to £10,500 from 6 April 2025 and the current restriction regarding the previous year’s liability will be removed.

National Insurance (NI)	2024/25	2025/26
Class 1 NI employees – earnings between £12,570 – £50,270	8%	8%
Class 1 NI employees – earnings in excess of £50,270	2%	2%
Class 1 NI employers – earnings in excess of £9,100	13.80%	15%
Class 1A Benefits in kind	13.80%	15%
Class 1B NI PAYE settlement agreements	13.80%	15%
Class 4 NI self-employed – Profits between £12,570 – £50,270	6%	6%
Class 4 NI self-employed earnings in excess of £50,270	2%	2%

Dividend Rate Bands

The dividend allowance will remain at £500 from 6th April 2025. There will be no change to the dividend tax rates.

Band	2024/25	2025/26
Dividend ordinary rate	8.75%	8.75%
Dividend upper rate	33.75%	33.75%
Dividend additional rate	39.35%	39.35%

Tax tip

With the dividend allowance threshold at only £500, it could be worthwhile transferring some shares to a spouse/civil partner to maximise it.

Do you have control over when a dividend can be paid out? If so have you made use of the £500 zero rate threshold for this tax year?

Tax tip

There are a number of approved tax efficient share option schemes, as well as the non-tax advantages share scheme arrangements, which could be considered when looking at incentivising employees. There are different issues, benefits and problems for each type of incentive arrangement, both for the employer and the employee.

Tax tip

If you are an employer ensure to carry out a regular review to ensure that you are adhering to the National Minimum Wage Regulations. Failure to comply, can result in a penalty of up to 200% of the liability due and any underpayment of wages can go back up to 6 years using the current NMW rates.

National Minimum Wage

The National Minimum Wage (NMW) and the National Living Wage (NLW) rates will increase by 6.7% from 1 April 2025.

	Currently	from 1-4-25
Worker 21 years+	£11.44	£12.21
Worker 18 – 20	£8.60	£10
Worker under 18	£6.40	£7.55
Apprentice	£6.40	£7.55

Pensions

The annual pension allowance, which impacts on how much individuals can contribute to their pension schemes will remain at £60,000 for 2025/26.

The Money Purchase Annual Allowance and Tapered Annual Allowance will remain at £10,000 from 6 April 2025. In addition the Tapered Annual Allowance will remain at £260,000.

Tax Tip

It is worth having an annual pension review, to ensure you maximise the use of all the pension allowances which may be available to you and to do so in the most tax efficient way.

From 6 April 2027 the government will bring unused pension funds and death benefits payable from a pension into a person’s estate for Inheritance Tax purposes.

The pension tax free lump sum percentage will remain at 25% of the pension value up to a maximum of £268,275.

From 30th October 2024, pension transfers from tax relieved UK pension to Qualified Registered Overseas Pension Schemes (QROPS) in the EEA and Gibraltar will be subject to a 25% charge, unless another exclusion applies.

Tax Tip

If you are a member of a UK registered pension scheme and are thinking of leaving the UK, you may want to consider topping up your pension scheme in the tax year in which you leave the UK in order to maximise your UK tax relief and enhance your pension provision. This should be done in conjunction with your accountant and a suitably qualified financial advisor.

State Pension

Under the triple lock, the State Pension will rise in line with the highest of average earnings, inflation or 2.5%. The Government have announced an increase to the State Pension of 4.1%. The new State Pension increases from £221.20 to £230.30 per week in April 2025, while the full basic State Pension will increase from £169.50 to £176.45 per week.

Tax Tip

Consider making voluntary national insurance contributions to fill gap years in your state pension history. Up until 5 April 2025 you can go as far back as April 2006. Each year would cost you just over £824. After that date you can only go back 6 tax years. The cost for each year would then be based upon the voluntary Class 3 national insurance rate applicable for that current year. Each additional year could result in an extra £342 state pension (based upon 2025/26 figures) on an annual basis.

Capital Gains Tax

The main rates of Capital Gains Tax will increase from 10% and 20% to 18% and 24% respectively for disposals on or after 30 October 2024.

The rate of Capital Gains Tax on the disposal of residential property remains the same.

Gains for	Before 30 Oct 2024	From 30 Oct 2024
Residential property to basic rate limit	18%	18%
Residential property above basic rate	24%	24%
Residential property for Trusts and personal representatives	24%	24%
Other assets to basic rate limit	10%	18%
Other assets above basic rate limit	20%	24%
Other assets for Trusts and personal representatives	20%	24%
Business Asset Disposal relief*	10%	10%
Investors relief*	10%	10%

* Business Asset Disposal relief or Investors relief rates up to lifetime limits. The lifetime limit for Investors Relief reduces to £1M from 30 October 2024. These rates will increase from 6 April 2025.

Tax Tip

Before you sell an asset, such as shares or property, please speak to us. There may be planning opportunities prior to the sale to reduce the potential capital gains tax.

Tax Tip

Remember, if you are a UK resident taxpayer and sell a UK residential property, which could trigger off a gain liable to capital gains tax (CGT), to avoid penalties from arising, you need to complete a CGT Return within 60 days of completion and pay the tax over within the same time frame.

There is no change to the capital gains tax annual exempt amount available. This is the tax-free allowance available against taxable gains.

Tax year	Individuals	Trustees
2024/25	£3,000	£1,500
2025/26	£3,000	£1,500

Business Asset Disposal Relief

The rate of Capital Gains Tax which applies to Business Asset Disposal Relief and Investors Relief will increase from 10% for disposals on or after 6 April 2025 to 14%, with a further increase the following year to 18%.

Inheritance Tax

The Chancellor has retained the £325,000 Nil Rate Band, the £175,000 Residence Nil Rate Band (RNRB) and the tapering limit for RNRB at £2 million until 5 April 2030.

The tax rates for Inheritance Tax remain unchanged, with the main rate staying at 40%.

From 6 April 2026, the 100% rates of Agricultural Property Relief and Business Property Relief will be restricted to the first £1 million of combined agricultural and business property, with the excess relieved at 50%.

Agricultural Property Relief (APR) is a relief from Inheritance Tax on the agricultural value of land and other property that is owned and occupied for the purposes of agriculture.

Business Property Relief (BPR) is a relief from Inheritance Tax on the value of certain business assets.

Tax Tip

Did the deceased gift an asset away within 7 years prior to death but the value of it was lower at the time of death? Normally the market value at the date of the gift comes back into the deceased’s estate for inheritance tax purposes. However, if the value was less at the time of death you can make a loss relief claim and use that value instead to mitigate the inheritance tax burden.

Tax Tip

As a result of the restriction of Business Property relief, one option for business owners to consider to protect their inheritance tax (IHT) position is to take out life policies to fund the IHT liabilities perhaps in conjunction with term policies to cover the risk of you dying within seven years of any lifetime gift. Qualified financial advisor advice should be taken in this instance.

Company Taxation

There were no new announcements for corporation tax. From 1st April 2025, the Corporation Tax main rate for non-ring fenced profits will remain at 25% for profits over £250,000.

	Profits	From 1-4-24	From 1-4-25
Main rate	over £250,000	25%	25%
Small profit rate	£50,000 or less	19%	19%
Marginal rate*	Between £50,000 & £250,000	26.50%	26.50%

*Profits below £50k effectively taxed at small profits rate

Tax Tip

Does your company have cash reserves which are not required for working capital? Consider paying your corporation tax early as the interest return on early payments is competitive.

Tax Tip

If your company is carrying out innovative work, is it worthwhile applying for a patent? Bearing in mind the corporation tax rates, the benefit of having a patent or you exclusively licence the rights to those patents, could result in the associated profits tied to the patent attracting a much lower corporation tax rate of only 10%.

The small profits rate (SPR) will continue at 19% for companies with profits of £50,000 or less. The small profits rate will not apply to close investment-holding companies.

Quick Tip

If you are an employer considering providing a one off/exceptional payment to your lower paid employees to mitigate the impact of the cost of living crises, then it may be better to do so in the form of non-cash vouchers, as opposed to cash itself, as it will not impact upon their universal credit payments.

Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.

If the total profits are below £250,000, the effective rate for profits between these limits is called ‘Marginal Rate’ and shown above.

Capital Allowances

This Budget has not changed the ability for companies to claim a 100% first year allowance (FYA) for main rate expenditure (known as Full Expensing) and 50% FYA for special rate expenditure. These allowances are only available to companies.

The 100% Annual Investment Allowance deduction for expenditure incurred of up to £1 million in purchasing plant & machinery also remains in place.

The 100% FYA for qualifying expenditure on zero-emission cars and on plant or machinery for electric vehicle charge-points has been extended to 31st March 2026 for Corporation Tax purposes and to 5th April 2026 for Income Tax purposes.

Research & Development

There are no changes to the R&D rules following the merger of the R&D tax relief scheme for small and medium-sized companies and the R&D expenditure credit (RDEC) used by large companies for accounting periods beginning on or after 1st April 2024.

The SME rules restricting relief where part of the project expenditure has been subsidised have been removed.

Tax Tip

The R&D criteria is quite wide, and many eligible companies are missing out on it. Since 1st April 2023, you only have 6 months from the end of the accounting period in which R&D activity has occurred to make a claim, unless you have made a similar claim in the previous 3 years.

Loss-making companies claiming the existing SME tax relief will be eligible for a higher payable credit rate of 14.5% if they meet the definition for R&D intensity.

For accounting periods beginning on or after 1 April 2024, the intensity threshold is 30%.

There is a one-year grace period that allows a company which fails to meet the intensity threshold, for example due to a one-off shock or small fluctuations in expenditure (for companies close to the threshold), to continue claiming the enhanced support in that year if it met the intensity threshold and successfully claimed enhanced support in the previous year.

Company car and fuel

Appropriate percentages for zero emission and electric vehicles will increase by 2 percentage points per tax year in 2028/29 and 2029/30, rising to an appropriate percentage of 9% in tax year 2029/30.

Appropriate percentages for all cars with emissions of 1 to 50g of CO2 per kilometre, including hybrid vehicles, will rise to 18% in tax year 2028/29 and 19% in tax year 2029/30.

Appropriate percentages for all other vehicle bands will increase by 1 percentage point per year in tax years 2028/29 and 2029/30. This will be to a maximum appropriate percentage of 38% for tax year 2028/29 and 39% for tax year 2029/30.

The car fuel benefit charge multiplier will be £28,200 in the 2025/26 tax year.

Van and Fuel Benefit

The van benefit charge will be £4,020 and fuel benefit charge £769 in the 2025/26 tax year. The Government will no longer maintain the treatment of double cab pick-up vehicles with a payload of one tonne or more as goods vehicles.

HMRC is updating guidance to clarify the position in respect of such vehicles which will be treated as cars for capital allowances, for benefits in kind and for some deductions from business profits. Transitional arrangements will also apply.

Fuel Duty

The Chancellor will extend the 5 pence cut in the rates of Fuel Duty first introduced at Spring Statement 2022 until 22nd March 2026.

Vehicle Excise Duty (VED)

The Budget announced VED first year rates for new cars registered on or after 1 April 2025.

Zero emission cars will pay the lowest first year rate at £10 until 2029/30.

Rates for cars emitting 1g/km to 50g/km of CO2, including hybrid vehicles, will increase to £110.

Rates for cars emitting 51g/km to 75g/km of CO2, including hybrid vehicles, will increase to £130.

All other rates for cars emitting 76g/km of CO2 and above will double from their current level.

Tax Tip

Before considering whether to buy or lease a car through the company or do so personally, why not have a review of the tax and national insurance impact on both you and the company before reaching that decision.

VAT

The taxable turnover threshold for determining whether a business must register for VAT remains at £90,000 and the point at which a business can apply to deregister will also remain at £88,000.

Tax Tip

Businesses that regularly receive VAT repayments from HMRC should consider filing VAT returns monthly instead of quarterly as this will help with their cashflow.

All education services and vocational training supplied by a private school or a ‘connected person’ for a fee will be liable to VAT at the standard rate of 20% starting on or after 1st January 2025.

Tax Tip

Where, in the past, private schools have suffered irrecoverable VAT on large capital projects, there may be some circumstances where the school could look back at that expenditure and possibly start recovering the VAT incurred under the Capital Goods Scheme.

Board and lodging services closely related to such supplies will also be liable to VAT at 20%, including when supplied by a ‘connected person’.

Any school fees paid on or after 29th July 2024 relating to the period from 1st January 2025 will also be liable to the standard rate of VAT.

Tax Tip

When first registering for VAT, you may be able to claim input VAT on goods purchased in the 4 year period before registration where those goods have been used in the business and are still owned on the first date of registration. This includes both stock and assets.

When first registering for VAT, you may be able to claim input VAT on services purchased in the previous 6 months for business purposes, unless already recharged to a customer prior to registration.

If the supplies you make are outside the scope of UK VAT (e.g. a provision of services to an overseas customer), but they would be taxable VAT supplies if they were made in the UK, then VAT input tax on expenditure incurred in relation to that supply may be claimed back.

The provision of nursery services to children below school age will remain VAT exempt as will state school education and sixth form colleges where no fee is charged.

Where a Special Education Needs place is provided at a private school and is funded by a local authority (LA) or similar body, the LA will be able to claim a VAT refund on the fees charged.

Annual Tax on Enveloped Dwellings (ATED)

The ATED charge for those property companies liable to pay it, has been increased by 1.7% in respect of the 2025/26 year.

Property value	2024/25	2025/26
£500,001 to £1M	£4,400	£4,450
£1,000,001 to £2M	£9,000	£9,150
£2,000,001 to £5M	£30,550	£31,050
£5,000,001 to £10M	£71,500	£72,700
£10,000,001 to £20M	£143,550	£145,950
Over £20M	£287,500	£292,350

Tax Tip

Do you own or have an interest in residential property through a corporate vehicle? Was the value of the property, as at 1st April 2022, worth more than £500,000 or did you acquire it after that date for more than that amount? Even if you rent the property out on a commercial basis, you still need to complete an ATED return within 30 days of acquiring the property.

If a corporate has constructed a new build or converted an existing property into a dwelling then it has 90 days from the completion date or the date it is first occupied if earlier to complete the ATED return. An ATED return should then be completed by 30th April each year otherwise penalty charges of up to £1,600 per property could arise.

Stamp Duty Land Tax (SDLT)

The temporary SDLT residential rates and thresholds which applied from 23 September 2022 comes to an end on 31 March 2025. The SDLT residential rates and thresholds in existence immediately prior to that date will apply from 1st April 2025.

Property/Lease premium/ Transfer value	until 31-3-25	from 1-4-25
Up to £125,000	Zero	Zero
£125,001 to £250,000	Zero	2%
£250,001 to £925,000	5%	5%
£925,001 to £1,500,000	10%	10%
Above £1,500,000	12%	12%

First time buyers relief may be available. Non-UK resident will still pay an additional 2% SDLT surcharge.

The SDLT surcharge on acquiring an interest, in excess of £40,000, in a second residential property increases from 3% to 5% from 30 October 2024.

Corporate bodies purchasing residential property valued at more than £500,000 will be charged SDLT at 17% from 31st October 2024. unless an applicable relief applies.

Tax Tip

If you have incurred the 3% SDLT Surcharge, uplifted 5% SDLT surcharge, (England and Northern Ireland) or the Welsh 4% Land Transaction Tax Higher Rate charge upon acquiring a new main residence but before having disposed of your previous one, then you may be able to claim a refund if you sell your old property within 36 months of purchasing the new one.

Tax Tip

If you have incurred the Scottish 6% (previously 4%) Additional Dwellings Supplement upon acquiring a new main residence before having disposed of your previous one, then you may be able to claim a refund if you sell your old property within 36 months of purchasing the new one. This timeframe was increased from 18 months to 36 months from 1st April 2024.

The Devolved Parliaments of Wales and Scotland will set their own land transaction tax rates in due course. The current rates are;

Wales residential Land Transaction Tax (LTT) rates

Property (freehold/leasehold) value	LTT rate
Up to £225,000	Zero
£225,001 to £400,000	6%
£400,001 to £750,000	7.50%
£750,001 to £1,500,000	10%
Above £1,500,000	12%

Scotland residential Land & Building Transaction Tax (LBTT) rate

Property purchase value	LBTT rate
Up to £145,000	Zero
£145,001 to £250,000	2%
£250,001 to £325,000	5%
£325,001 to £750,000	10%
Above £750,000	12%

Non-Dom Tax status

From 6 April 2025, the current remittance basis of taxation will be abolished for UK resident non-domiciled individuals.

This will be replaced with a new 4-year foreign income and gains (FIG) regime for individuals who become UK tax resident after a period of 10 tax years of non-UK residence.

Qualifying individuals will not pay tax on FIG arising in the first 4 tax years after becoming UK tax resident and will be able to bring these funds to the UK free from any additional charges.

They will not pay tax on non-resident trust distributions either.

Individuals, who on 6 April 2025, have been tax resident in the UK for less than 4 years (after 10 years of non-UK tax residence) will be able to use this new regime for any tax year of UK residence in the remainder of those 4 years. The protection from tax on foreign income and gains arising within settlor-interested trust structures will no longer be available for non-domiciled and deemed domiciled individuals who do not qualify for the 4 year foreign income and gains regime.

Transitionally, for Capital Gains Tax purposes, current and past remittance basis users will be able to rebase foreign assets they held on 5 April 2017 to their value at that date when they dispose of them.

Any foreign income and gains that arose on or before the 5 April 2025, while an individual was taxed under the remittance basis, will continue to be taxed when remitted to the UK under the current rules. This includes remittances by those who are eligible for the new 4-year foreign income and gains regime.

A new Temporary Repatriation Facility will be available for individuals who have previously claimed the remittance basis. They will be able to designate and remit at a reduced rate foreign income and gains that arose prior to the changes. This includes unattributed foreign income and gains held within trust structures.

The Temporary Repatriation Facility (TRF) will be available for a limited period of 3 tax years, from 2025/2026. The TRF rate will be 12% for the first 2 years and 15% in the final tax year of operation.

The measure extends the period of Overseas Workday Relief to 4 years to align with the new 4-year foreign income and gains regime.

From 6 April 2025, Overseas Workday Relief will be subject to a financial limit on the amount of relief that can be claimed, this is the lower of £300,000 or 30% of an individual’s total employment income.

Furnished Holiday Lettings

The announcement that the FHL regime was to be abolished was in the Spring 2024 Budget. However it did not get enacted before the General Election came about.

The Labour Government have since confirmed its demise.

FHL will be treated the same as long term lets from April 2025 as regards income tax.

Loan interest relief will be restricted to a 20% income tax credit from April 2025.

Where an existing FHL business has an ongoing capital allowances pool of expenditure, it can continue to claim writing down allowances on that pool post April 2025 but not in respect of new expenditure after that date.

Tax Tip

If you are a furnished holiday let business, and you can afford to do so, consider whether to incur capital expenditure in advance of the beginning of April 2025, as the favourable capital allowances treatment will no longer be available for expenditure post that date.

There is an anti-forestalling rule which, with minor exceptions, prevents FHL owners obtaining capital gains relief through the use of unconditional contracts with effect from 6th March 2024.

FHL income will not be counted as relevant income for pension contribution purposes from 6th April 2025 onwards.

Certain capital gains tax reliefs will cease from April 2025 except where the FHL conditions are satisfied up to April 2025 and the criteria for that particular relief includes conditions which can still come into play post April 2025.

Where the FHL business ceased prior to 6th April 2025, business asset disposal relief (the 10% capital gains tax rate) may still apply to a disposal of the property within 3 years of the FHL business coming to an end.

Tax Tip

Furnished holiday let income will cease to count as net relevant earnings for pension purposes from 6th April 2025 onwards. It may be worth checking if it is worthwhile and feasible to top up your pension pot prior to this beneficial pension treatment coming to an end.

High Income Child Benefit Charge (HICBC)

The individual’s High Income Child Benefit Charge (HICBC) adjusted net income threshold will remain at £60,000.

Tax Tip

If you are a single parent or divorced or widowed and a new partner subsequently moves in with you, depending upon their level of income, you may find that they may get hit for the high income child benefit charge.

For individuals with income between £60,000 and £80,000, the rate at which HICBC is charged is halved, and will equal one per cent for every £200 of income that is more than £60,000.

Tax Tip

If you have a child under the age of 12 and register for child benefit you will automatically receive a parent’s state pension credit for each year. If you have a family member who helps you with childcare support whilst you are at work and has a gap in their own national insurance records, you may be able to elect to transfer your state pension credit to them.

Tax Tip

If you have separated from your spouse or partner, with the intention for it to be a permanent separation, or if you divorce, then it is important to revisit the child benefit claim. Failure to do so could result in you being hit for the HICBC even if the child may not live with you.

Individual Savings Account (ISA)

The existing ISA allowance limit of £20,000 will remain in place for the 2025/26 tax year.

The Junior ISA allowance limit and Child Trust Fund subscription limit will continue at £9,000 per annum.

Employee Ownership Trusts (EOT)

There is a tightening of the EOT rules as regards disposal made to the trustees of an EOT on or after 30 October 2024.

The revised tax treatment for contributions made to an EOT to repay the former owner and the changes to the Income Tax relief conditions for annual bonus payments to employees of EOT controlled companies also has effect from 30 October 2024.

Legislation will be introduced to restrict former owners or persons connected with former owners from retaining control of companies post-sale to an EOT by virtue of control (direct or indirect) of the EOT.

Tax Tip

If you are a partially exempt business for VAT purposes, you normally cannot claim the VAT input tax on costs attributable to any VAT exempt supplies that you make. However, if the total value of your exempt input tax is not more than £625 per month on average and it represents no more than 50% of your total VAT input tax then this can be recovered.

Trustees of an EOT must be UK resident (as a single body of persons) at the time of disposal to the EOT. Trustees must take reasonable steps to ensure that the consideration paid to acquire the company shares does not exceed market value.

If qualifying conditions surrounding the EOT are breached, the timeframe to clawback tax relief from the vendor has been extended to the end of the 4th tax year following the end of the tax year of disposal.

A requirement that individuals provide within their claim for Capital Gains Tax relief information on the sale proceeds and the number of employees of the company at the time of disposal.

Tax Tip

If a business deregisters for VAT purposes, it must account for output tax on unpaid sales invoices on its final VAT Return. However, if at a later date (up to 4 years), some sales are written off as they are not expected to be paid by the customer then bad debt relief can be claimed.

Tobacco & vaping duty

With effect from 6pm on 30th October 2024 duty rates for all tobacco products will increase using the TD escalator by 2% above inflation (based on the Retail Price Index (RPI).

The rate for hand-rolling tobacco by an additional 10% above the escalator, to 12% above RPI. There will be a one-off TD increase of £2.20 per 100 cigarettes or 50 grams of tobacco, effective from 1 October 2026.

With effect from 1st October 2026 there will be a single VPD rate of £2.20 per 10ml of vaping liquid.

Tax Tip

Were you going to receive shares from your employer as a result of your employment? Subject to the way those shares are provided, you could be liable to an immediate income tax charge (in some cases national insurance as well), based upon the actual market value (AMV) of the shares at the time. You and your employer may want to elect, within 14 days of receiving the shares, to be taxed on the unrestricted market value (UMV) instead. More tax is likely to be paid upfront but it may result in considerable overall tax savings further down the line.

Alcohol duty

AD duty rates on draught products below 8.5% alcohol by volume (ABV), will be cut by 1.7%, so that an average ABV strength pint will pay 1 pence less in duty.

AD duty rates on non-draught products will increase in line with RPI inflation.

These AD measures will take effect from 1 February 2025.

Tax Tip

Are you an employer who retains an element of the tips, gratuities or service charges to meet any employers national insurance liability which may arise in respect of that income? Be aware that the Employment (Allocation of Tips) Act came into force from 1st October 2024. Under the legislation an employer will not be able to retain any monies of this ilk, as it all has to be paid out to the employee.

Consider setting up an independently controlled Tronc scheme which should help you avoid suffering the employers national insurance liability in the first place.

Be aware that tips, gratuities or service charges allocated to the employees do not count as wages when applying the national minimum wage legislation.

Infrastructure Spending

The Government has changed its self-imposed debt rules in order to free up £50 billion for infrastructure spending.

The National Audit Office and the Office for Budget Responsibility will be asked to validate the investments made.

The extra room for manoeuvre for spending on investment projects will not be able to be used for extra day to day spending, as this will need to be funded from tax receipts.

There will be £500 million in new funding to help build up to 5,000 social homes and bring total investment in housing supply to £5 billion as part of the government’s Affordable Homes Programme.

A further £1.4 billion will be allocated to rebuild crumbling schools.

Tax Tip

Are you looking to reward employees who have been with you for more than 20 years? You can provide long service gifts which can be free of tax for the employee. The gifts can be worth up to £50 for each year of service up to a maximum of 20 years and should be the first in the last 10 years, and not cash.

Further Announcements

To help support aims to reduce waiting times, there will be an additional £1.5 billion capital investment into new surgical hubs and scanners, alongside £70 million for new radiotherapy machines.

£1.8 billon will be allocated for the expansion of government-funded childcare, with a further £15 million of capital funding for school-based nurseries.

Tax Tip

A charity or Community Amateur Sports Club may be able to claim 25% on cash or contactless card donations of £30 or less up to a maximum of £2,000 in relief, without the need to keep individual donor records under the Gift Aid Small Donation Scheme.

The first stage of the plan will pay for 300 new or expanded nurseries across England.

The government will triple investment into free breakfast clubs to £30 million in 2025/26.

From the beginning of next week the subsidised £2 bus fare cap will be increased to £3.

The subsidy was due to come to an end in December this year but the government has extended it for a further year. The Chancellor has raised the limit people can earn before being ineligible for the Carers Allowance from £151 a week to £181.

To keep more children in stable and loving homes, £44 million of funding has been announced to support kinship and foster carers.

£240 million Get Britain Working package to include work, skills and health support for disabled people and the long-term sick has been announced.

Benefit reform will be accelerated this year, with 800,000 people on the old Employment and Support Allowance (ESA) benefit to be moved onto Universal Credit (UC) from this autumn instead of 2028.

The Energy Profits Levy will increase from 35% to 38% from 1st November 2024 until 31st March 2030.

The alternative finance (AF) legislation is amended, with effect from 30th October 2024, to ensure that where an existing asset is used as a means to raise finance using AF, the tax outcome is broadly the same as conventional financing.

The government is extending the employer National Insurance contributions relief for employers hiring qualifying veterans for a further year from 6 April 2025 until 5 April 2026.

The late payment interest rate charged by HMRC on unpaid tax liabilities will increase by 1.5% from April 2025.

The Help to Save Scheme will be extended a further two years to 5th April 2027.

Making Tax Digital (MTD) for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of this Parliament.

Chancellor Jeremy Hunt has just finished delivering his Spring Budget 2024, in which he said the Conservatives have a plan to ‘grow the economy’. He confidently stated that his Budget will “unleash people power and put this country back on the path to lower taxes. Growth up, jobs up, taxes down.”

• Property tax – The furnished holiday let regime is to be abolished – the main impact here will be the mortgage interest relief gained previously will go, and it will be brought in line with the current rules for ordinary let property (mortgage interest rate is limited to 20%).
• Stamp duty – The multiple dwelling relief is to be abolished.
• Capital Gains Tax – The higher rates for property will be reduced to 24% – good news for those higher rate tax payers with gains due to be made from property sales.
• Child benefit – A consultation on moving to a system based on household income, rather than an individual within a household, with the aim to be introduced by April 2026. In the mean time the child benefit threshold will be increased to £60,000.
• VAT registration threshold – Is to be increased from £85,000 to £90,000 from April 1st, the first increase in seven years.
• Income tax and NI – The main rate Employee NIC is to be cut to 8%, and self employed cut to 6% from April 2024. This will save the average employed worker £450 per year on top of the £450 per year announced in the Autumn Statement.

The Budget 2024 – Full Report

Chancellor Jeremy Hunt delivered his ‘Budget for Long Term Growth’ on Wednesday 6 March 2024. His speech promised ‘more investment, more jobs, better public services and lower taxes’.

Lowering taxes

The Chancellor made further changes to National Insurance contributions (NICs), following the cuts made in the Autumn Statement 2023. The rates for NICs will be cut further for both employees and the self-employed from 6 April 2024.

There was also a cut in the higher rate of Capital Gains Tax on residential property disposals and the creation of a new ISA allowance to encourage investment in promising UK businesses.

The Chancellor has responded to pressure from business groups by raising the threshold for VAT registration to £90,000 and announcing his intention to extend Full Expensing to leased assets.

Making it possible

The Chancellor made his cuts possible with a series of tax-raising measures. These included a new regime for non-doms, the abolition of the Furnished Holiday Lettings tax regime and Multiple Dwellings Relief, alongside a new duty on vaping and an increase in tobacco duty.

Personal Tax

Tax bands and rates

The basic rate of tax is 20%. For 2024/25 the band of income taxable at this rate is £37,700 so that the threshold at which the 40% band applies is £50,270 for those who are entitled to the full personal allowance.

The basic rate band is frozen at £37,700 until April 2028. The National Insurance contributions upper earnings limit and upper profits limit will remain aligned to the higher rate threshold at £50,270 for these tax years as well.

For 2024/25, the point at which individuals pay the additional rate of 45% is £125,140.

The additional rate for non-savings and non-dividend income will apply to taxpayers in England, Wales, and Northern Ireland. The additional rate for savings and dividend income will apply to the whole of the UK.

Scottish residents

The tax on income (other than savings and dividend income) is different for taxpayers who are resident in Scotland from that paid by taxpayers resident elsewhere in the UK. The Scottish income tax rates and bands apply to income such as employment income, self-employed trade profits and property income.

In 2024/25 a new 45% rate will be introduced, making six income tax rates which range between 19% and 48%. Scottish taxpayers are entitled to the same personal allowance as individuals in the rest of the UK.

Welsh residents

Since April 2019, the Welsh Government has had the right to vary the rates of income tax payable by Welsh taxpayers (other than tax on savings and dividend income). The UK government has reduced each of the three rates of income tax paid by Welsh taxpayers by 10 pence. For 2024/25 the Welsh Government has set the Welsh rate of income tax at 10 pence which has been added to the reduced rates. This means the tax payable by Welsh taxpayers is the same as that payable by English and Northern Irish taxpayers.

The personal allowance

The income tax personal allowance is fixed at the current level until April 2028 at £12,570.

There is a reduction in the personal allowance for those with ‘adjusted net income’ over £100,000. The reduction is £1 for every £2 of income above £100,000. This means that there is no personal allowance where adjusted net income exceeds £125,140.

The government will uprate the married couple’s allowance and blind person’s allowance for 2024/25.

The marriage allowance

The marriage allowance permits certain couples to transfer £1,260 of their personal allowance to their spouse or civil partner.

Comment

The marriage allowance reduces the recipient’s tax bill by up to approximately £250 a year. To benefit from the marriage allowance one spouse or civil partner must normally have no income or income below the personal allowance for the year. Since the marriage allowance was first introduced there are couples who are entitled to claim but have not yet done so. It is possible to claim for all years back to 2019/20 where the entitlement conditions are met. The total tax saving for all years up until 2022/23 could be over £1,000. A claim for 2019/20 will need to be made by 5 April 2024.

Tax on savings income

Savings income is income such as bank and building society interest.

The Savings Allowance applies to savings income and the available allowance in a tax year depends on the individual’s marginal rate of income tax. Broadly, individuals taxed at up to the basic rate of tax have an allowance of £1,000. For higher rate taxpayers the allowance is £500. No allowance is due to additional rate taxpayers.

Savings income within the allowance still counts towards an individual’s basic or higher rate band and so may affect the rate of tax paid on savings above the Savings Allowance.

Some individuals qualify for a 0% starting rate of tax on savings income up to £5,000. However, the rate is not available if taxable non-savings income (broadly earnings, pensions, trading profits and property income, less allocated allowances and reliefs) exceeds £5,000.

Tax on dividends

Currently, the first £1,000 of dividends is chargeable to tax at 0% (the Dividend Allowance). This will be reduced to £500 for 2024/25.

These changes will apply to the whole of the UK.

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.

The Corporation Tax due on directors’ overdrawn loan accounts is paid at 33.75% and remains unchanged.

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.

To determine which tax band dividends fall into, dividends are treated as the last type of income to be taxed.

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.

As previously announced the LA of £1,073,100 will be abolished from 2024/25. Changes have been made to clarify the taxation of lump sums and lump sum death benefits, and the application of protections, as well as the tax treatment for overseas pensions, transitional arrangements, and reporting requirements.

Individual Savings Accounts

The government is freezing the limits on Individual Savings Accounts (ISAs) (£20,000), Junior Individual Savings Accounts (£9,000), Lifetime Individual Savings Accounts (£4,000 excluding government bonus) and Child Trust Funds (£9,000) for 2024/25.

The government announced that it is looking to introduce the UK ISA. This will have a new ISA allowance of £5,000 in addition to the existing ISA allowance, and will provide a new tax-free savings opportunity for people to invest in the UK.

High Income Child Benefit Charge

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

The government is increasing the income threshold at which HICBC starts to be charged 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. This means that Child Benefit will not be withdrawn in full until individuals have ‘adjusted net income’ of £80,000 or more.

Comment

The government estimates 485,000 families will gain an average of £1,260 towards the cost of raising their children in 2024/25. 170,000 families will be taken out of paying the tax charge.

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

Non-UK domiciled individuals

From 6 April 2025, the current remittance basis of taxation for non-UK domiciled individuals will be abolished and replaced with a residence-based regime. Individuals who opt into the new regime will not pay UK tax on any foreign income and gains arising in their first four years of tax residence, provided they have been non-tax resident for the last ten years. Anyone who has been tax resident in the UK for more than four years will pay UK tax on their foreign income and gains.

The government will also introduce the following transitional arrangements for existing non-UK domiciled individuals claiming the remittance basis:

• an option to rebase the value of capital assets to 5 April 2019
• a temporary 50% exemption for the taxation of foreign income for the first year of the new regime (2025/26)
• a two year Temporary Repatriation Facility to bring previously accrued foreign income and gains into the UK at a tax rate of 12%.

The government will also reform Overseas Workday Relief for employment duties carried out overseas.

Inheritance Tax (IHT) is currently a domicile-based system. The government announced the intention to move to a residence-based system, subject to consultation, but no changes to IHT will take effect before 6 April 2025.

Employment

National Insurance contributions

The Chancellor has previously announced major changes to the National Insurance contributions (NICs) system.

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.

Comment

According to the government, building on changes made at the Autumn Statement the government has cut taxes again for 29 million people with the average worker on £35,400 receiving a cut in 2024/25 of over £900.

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.

Comment

This will mean that a self-employed person who currently pays Class 2 NICs will save at least £192 per year.

Secondly, the government will cut the main rate of Class 4 self-employed NICs from 9% to 6% from 6 April 2024.

Comment

This will benefit around two million individuals, recognising the contribution of the self-employed to the economy and ensuring that work pays for all. According to the government, combined with the removal of the requirement to pay Class 2 NICs, this will save an average self-employed person on £28,000 £650 a year.

Extension of NICs relief for hiring veterans

The government is extending the employer NICs relief for businesses hiring qualifying veterans for a further year from April 2024 until April 2025. This means that employers will continue to pay no employer NICs up to annual earnings of £50,270 for the first year of a qualifying veteran’s employment in a civilian role.

National Living Wage and National Minimum Wage

The government has accepted in full the recommendations of the Low Pay Commission and announced increased rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from 1 April 2024. In addition, from 1 April 2024 the NLW will be extended to 21 and 22 year olds. The rates which will apply from 1 April 2024 are as follows:

	NLW	18-20	16-17	Apprentices
From 1 April 2024	£11.44	£8.60	£6.40	£6.40

The apprenticeship rate applies to apprentices under 19 or 19 and over in the first year of apprenticeship. The NLW applies to those aged 21 and over.

Comment

The Department for Business and Trade estimates 2.7 million workers will directly benefit from the 2024 National Living Wage increase.

Taxable benefits for company cars

The rates of tax for company cars remain frozen for 2024/25. Future car benefit rates have been announced for 2025/26 to 2027/28:

• For 2025/26, the rates for emissions under 75gm/km increase by 1%.
• For 2026/27, the rates for emissions under 75gm/km increase by a further 1%.
• For 2027/28, the rates for emissions under 75gm/km increase by a further 1%.

The charge for electric cars will rise from 2% to 5% over that period.

For cars with emissions of 75gm/km and above, there will be a 1% rise in 2025/26 only, subject to a maximum of 37%.

From 6 April 2024 the figure used as the basis for calculating the benefit for employees who receive free private fuel from their employers for company cars remains £27,800.

Company vans

For 2024/25 the benefit remains £3,960 per van and the van fuel benefit charge where fuel is provided for private use remains £757. If a van cannot in any circumstances emit CO₂ by being driven, the cash equivalent is nil.

Business

Corporation Tax rates

The government has confirmed that the rates of Corporation Tax will remain unchanged, which means that, from April 2024, the rate will stay at 25% for companies with profits over £250,000. The 19% small profits rate will be payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective Corporation Tax rate.

Capital allowances

The Full Expensing rules for companies allow a 100% write-off on qualifying expenditure on most plant and machinery (excluding cars) as long as it is unused and not second-hand. The rules were originally designed to be effective for expenditure incurred on or after 1 April 2023 but before 1 April 2026. Similar rules apply to integral features and long life assets at a rate of 50%. The government announced in the Autumn Statement 2023 that both allowances will be made permanent.

The government is to publish draft legislation for consultation to help consider any potential extension to include plant and machinery for leasing.

The Annual Investment Allowance (AIA) is available to both incorporated and unincorporated businesses. It gives a 100% write-off on certain types of plant and machinery up to certain financial limits per 12-month period. The limit remains at £1 million.

Transfer of assets abroad – anti-avoidance legislation

The Transfer of Assets Abroad (ToAA) provisions will be amended so that UK resident individuals cannot bypass the legislation, by using a company to transfer assets offshore in order to avoid tax. Transfers of assets by certain companies will be considered a relevant transfer for the purposes of the legislation. The new measure will apply to income arising to persons abroad on or after 6 April 2024.

Creative Industries

The government has announced additional support for UK independent films already eligible for the Audio-Visual Expenditure Credit (AVEC). The AVEC is currently set as a basic credit of 34% of qualifying expenditure. Companies with qualifying UK independent films with a budget of £15 million or less will be able to claim a new UK Independent Film Tax Credit (IFTC) of 53%. Qualifying expenditure will be capped at 80% of the film’s total core expenditure. Qualifying films will need to commence principal photography on or after 1 April 2024 and claims can be made from 1 April 2025.

Comment

The maximum IFTC claim will be £6,360,000.

Separately, from 1 April 2025, companies with qualifying visual effects costs will be able to claim an increased AVEC of 39%, a 5% increase on the basic credit. The 80% cap will also be removed for qualifying visual effects costs.

For Theatre Tax Relief, Orchestra Tax Relief and Museums and Galleries Tax Relief, the temporary rates of 40%/45% for non-touring/touring and orchestral productions will be made permanent from 1 April 2025.

Furnished Holiday Lettings

The Furnished Holiday Lettings (FHL) tax regime will be abolished from April 2025. Draft legislation is to be published and will include anti-forestalling measures that will apply from 6 March 2024. The effect of abolishing the rules will be that short-term furnished holiday lets and longer-term residential lets are treated the same for tax purposes and individuals will no longer need to report the two income streams separately.

Research and Development relief

As announced in the Autumn Statement 2023, the existing Research and Development Expenditure Credit (RDEC) and SME schemes will be merged, with expenditure incurred in accounting periods beginning on or after 1 April 2024 being claimed in the merged scheme. The rate under the merged scheme will be set at the current RDEC rate of 20%.

The changes also provide additional relief for loss-making Research and Development (R&D) intensive SMEs through a higher rate of payable tax credit from April 2023, as a feature of the existing SME scheme. Those entitled to this higher rate would, from April 2024, continue to claim under rules similar to the current SME scheme rather than under the new RDEC scheme.

A number of other changes will apply to the new regime from April 2024, including that R&D claimants will no longer be able to nominate a third-party payee for R&D tax credit payments, subject to limited exceptions.

Comment

Further action may be needed to reduce the unacceptably high levels of non-compliance with the R&D rules and HMRC will be publishing a compliance action plan.

Making Tax Digital for income tax

The government has announced the outcome of the review into the impact of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) on small businesses and intends to proceed with implementation from April 2026. The government will also ensure taxpayers who join MTD from 6 April 2024 are subject to the government’s new penalty regime for the late filing of tax returns and late payment of tax.

Business Rates

The small business multiplier will be frozen for another year, while the 75% Retail, Hospitality and Leisure relief will be extended for 2024/25. The standard multiplier will be uprated in line with the Consumer Prices Index for September 2023. These changes will take effect from 1 April 2024 in England.

Freeports and Investment Zones

Both regimes allow businesses in specific locations to benefit from a number of reliefs including Stamp Duty Land Tax relief, enhanced capital allowances, structures and buildings allowances and secondary Class 1 NIC relief for eligible employers.

As announced in the Autumn Statement 2023, the government will extend the window to claim the tax reliefs available in Freeport special tax sites from five to ten years. The extension to the sunset dates will be enacted by secondary legislation and have been confirmed as:

• 30 September 2031 for special tax sites in respect of English Freeports
• 30 September 2034 for special tax sites in respect of Scottish Green Freeports and Welsh Freeports.

Other

Other announced changes include:

• Making the cash basis of accounting the default position for the self-employed from 2024/25, with an alternative to opt for the accruals basis, together with technical changes to the regime.
• A number of changes to strengthen the Construction Industry Scheme from April 2024.

Capital Taxes

Capital Gains Tax rates

The Capital Gains Tax (CGT) rate remains at 10%, to the extent that any income tax basic rate band is available, and 20% thereafter.

Higher rates apply for certain gains, mainly chargeable gains on residential properties, with the exception of any element that qualifies for Private Residence Relief. These rates are changed from 18% and 28% in 2023/24 to 18% and 24% in 2024/25.

There is still potential to qualify for a 10% rate on gains up to £1 million under Business Asset Disposal Relief and £10 million under Investors’ Relief.

CGT annual exemption

The government has announced that the CGT annual exempt amount will be reduced from £6,000 to £3,000 from 6 April 2024.

Inheritance Tax nil rate bands

Despite much speculation before the Budget, Inheritance Tax (IHT) has not been abolished. The nil rate band has been frozen at £325,000 since 2009 and this will now continue up to 5 April 2028. An additional nil rate band, called the ‘residence nil rate band’ is also frozen at the current £175,000 level until 5 April 2028.

Changes to Agricultural Property Relief and Woodlands Relief

To ensure compatibility with EU law, action was taken many years ago to expand the scope of Agricultural Property Relief (APR) and Woodlands Relief to property located in the European Economic Area. Following Brexit, this measure reverses those changes and also removes APR from property in the Channel Islands and Isle of Man. Broadly, the changes take effect from 6 April 2024.

Environmental land management and ecosystem service markets

The government is undertaking significant reform of agricultural policy and spending in England.

At Budget 2023, the government published a consultation exploring elements of the tax treatment of environmental land management and ecosystem service markets. Following consideration of the responses, the government has decided:

• to extend the existing scope of APR from 6 April 2025 to land managed under an environmental agreement with, or on behalf of, the UK government, Devolved Administrations, public bodies, local authorities, or approved responsible bodies and
• not to restrict APR to tenancies of at least eight years.

Other Matters

The VAT registration threshold

After many years of having been frozen, the government will increase the VAT registration threshold from £85,000 to £90,000 and the deregistration threshold from £83,000 to £88,000 from 1 April 2024. The government has stated that these new thresholds will be frozen but has not stated for how long.

Stamp Duty Land Tax changes

A number of changes are made to the Stamp Duty Land Tax (SDLT) regime. These include the following:

• The abolition of Multiple Dwellings Relief, broadly from 1 June 2024 but subject to transitional rules, for purchasers of residential property in England and Northern Ireland.
• Changes to First-Time Buyer Relief to extend it to individuals buying a new residential lease via a nominee or bare trust for transactions with an effective date (usually the date of completion) on or after 6 March 2024, but subject to transitional rules.
• Public bodies in England and Northern Ireland will be removed from the scope of the 15% SDLT higher rate charge where the effective date of transaction (usually the date of completion) is on or after 6 March 2024.

Simplification measures

The government has announced a package of measures that supports its ambition to simplify and modernise the tax system, which includes the following:

• To simplify the process for employees claiming tax relief on their expenses, and for HMRC to automatically process claims, the government is designing a new, online service for employees to claim tax relief on all of their expenses in one place.
• The government will mandate the reporting and paying of income tax and Class 1A NICs on benefits in kind via payroll software from April 2026.
• The government will legislate to introduce a route for people to apply for National Insurance Credits for parents and carers for tax years where they have not claimed Child Benefit, to ensure that people do not miss out on their State Pension entitlement.

Other changes

• The alcohol duty freeze will be extended until February 2025.
• The temporary 5p cut in fuel duty rates will be extended until March 2025 and the planned inflation increase for 2024/25 will not take place.
• A new duty on vaping products will be introduced from 1 October 2026. The government will also introduce a one-off tobacco duty increase from the same date.