Hunt Announces Tax Cuts and ISA Changes in Spring Budget

Chancellor Jeremy Hunt unveiled a package of tax cuts and savings measures in his Spring Budget address today. Here's a quick rundown of the key announcements for small businesses & freelancers:

• National Insurance Cut: Hunt confirmed a further 2p cut to National Insurance contributions for employees, amounting to roughly £450 a year for the average worker.

• National Insurance Cut for Self-Employed: National Insurance contributions will be reduced from 8% to 6%, meaning the average self-employed person earning £28,000 a year will save £650 per year.

• Increased Higher VAT Threshold: The threshold at which businesses start paying Value Added Tax (VAT) will increase by £5,000 to £90,000.

• New ‘British’ ISA: A new tax-free savings account, the "British ISA", will be introduced. This will allow individuals to invest an additional £5,000 annually.

• Raised Child Benefit Cut-Off Rate: Hunt raised the income threshold at which families begin to lose their entitlement to child benefit. Previously, this benefit started to be phased out for families with income exceeding £50,000. The new cut-off point will be £80,000, meaning more families with one earner making between £50,000 and £80,000 will be eligible to receive the full benefit amount.

• Capital Gains Tax Changes: While previously announced in the November 2022 budget, the Spring Budget confirmed the reduction of the annual Capital Gains Tax (CGT) allowance from £6,000 to £3,000, effective April 6, 2024. This decrease means individuals will have a lower threshold of gains they can realise before incurring capital gains tax. However, Hunt also announced a reduction in the higher rate of property capital gains tax from 28% to 24%, potentially offering some relief for property sellers.

• Furnished Holiday Lettings tax: From 06 April 2025 the Furnished Holiday Lettings tax regime will be abolished. This means that short-term and long-term lets will be treated the same for tax purposes.

• Recovery Loan Scheme: will be extended and renamed the Growth Guarantee Scheme