Spring 2024 Budget

Spring 2024 Budget – 6 March 2024

The Chancellor sat down at 13.38 after Budget speech lasting over an hour. With a few notable exceptions, almost everything he announced had been trailed in the previous few days.

As with all Budgets and Statements, many of the important announcements are hidden in the small print of the numerous Government Budget publications. We will scour these for developments that are relevant to public bodies.

In the meantime, we have summarised the main points below.

Employment taxes

NIC reduction announced from 6 April

Following the announcement in the Autumn Statement, the Chancellor announced further reductions in NIC for employees and the self-employed

The Government is cutting the main rate of employee NIC from 10% to 8%. Combined with the 2% cut in the Autumn, we are told the average worker will save £900 a year. Similarly, the main rate of Class 4 NICs for the self-employed will now be reduced from 9% to 6%. Again following the abolition of Class 2 NICs announced in the Autumn from April 2024, we are told this will save an average self-employed worker £650 a year.

High-income child benefit charge (HICBC)

The HICBC is another part of the tax system that needs to be updated. It is not fair that currently a household with two parents each earning £49,000 a year will receive Child Benefit in full, while a household earning less overall but with one parent earning over £50,000 will see some or all of the benefit withdrawn.

The Government stated that it is committed to removing this unfairness and moving to a system based on household rather than individual incomes by April 2026, and will consult in due course.

Whilst the details are being consulted upon, as a temporary measure from April 2024 the threshold for the HICBC will rise from £50,000 to £60,000. The rate of the charge will also be halved so that Child Benefit is not repaid in full until you earn £80,000. The Government estimates that nearly half a million families will gain an average of £1,260 in 2024-25 as a result.

Confirmation of earlier announcements

The Government has confirmed that there will be further clarifications made on 18 April 2024 regarding matters that have previously been announced. These include:

  • Following the announcement in January of the intention to mandate the payrolling of benefits in kind from April 2026 and remove year-end P11D reporting, further detailed updates are expected.
  • After the most recent consultation into the new Off-Payroll Working (IR35) offsetting rules, which will take into account tax/NIC paid by an intermediary personal service company, we expect final confirmation on the details of this prior to its introduction on 6 April 2024.
  • The Government also confirmed its intention to provide an update on the consultation into using umbrella companies and, in particular, how to address non-compliance.

SDLT

Multiple dwelling relief (“MDR”)

The Budget announced the Government’s response to the consultation on multiple dwelling relief (“MDR”), which closed in February 2022. MDR will be abolished for all transactions from 1st June 2024.

There will be transitional rules. The relief will be available still for buyers who exchanged contracts before 6 March 2024 and complete the contracts provided there is no variation of the contract after that date. There will be no changes to treatment of mixed-use properties.

Where linked transactions include the purchase of dwellings before and after the change, they will be treated as unlinked for the purposes of MDR.

Section 71 relief for purchases with retained right to buy receipts

Local authorities can now claim SDLT relief on the purchase of property using retained right-to-buy receipts, following Budget changes to the legislation effective 6 March 2024.

The change has added retained right to buy receipts to the definition of public subsidy for the purposes of s71 relief.

PSTAX has been negotiating with HMRC about this for the last two years. It appears HMRC and the Government have now listened to our arguments that the s71 SDLT relief was always intended to cover the use of retained right to buy receipts.

The Government says that the measure supports its objectives on social housing by ensuring that public funds given to providers of such housing, such as local authorities, are fully used towards providing homes, rather than spent on SDLT. It clarifies that where proceeds from social housing are retained and recycled for the provision of new social housing, SDLT is not a cost, ensuring that the exemption continues to operate as intended in supporting the provision of social housing. Additionally, the cap on the percentage of a replacement home that can be funded by retained right to buy funds is increased from 40% to 50%.

There is a higher SDLT rate of 15% for high-value dwellings. Public Bodies will now be exempted from this higher rate.

Any questions? – Book a meeting with our team today!

Nick Burrows

Written by Nick Burrows

Nick has nearly 30 years of working with and supporting public sector bodies with VAT and indirect taxes, starting at HM Customs and Excise and then as in-house VAT Officer at Hampshire County Council. Since moving to advisory firms, Nick has had senior public sector VAT roles at RSM Tenon (now RSM), KPMG, and PSTAX (since 2014). He has led VAT advice nationally on a wide range of public sector issues and helped shape HMRC policy in several key areas.

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