Spring Budget 2024

The Chancellor announced a “budget for long term growth”, however, with fiscal projections remaining flat and recognising a limited amount of wiggle room, significant tax cuts were not on the table.  

How will it affect you?

The elephant in the room is the continued theme concerning personal finances with the extended freezing of various allowances (namely income tax and inheritance tax) beyond which taxes are levied.  The impact of this, of course, is that more people will be dragged into the 40% higher-rate income tax bracket, and many more will start paying income tax for the first time. The personal allowance is set to remain at £12,570 until 5 April 2028.

For businesses, the formerly announced increase in the rate of mainstream corporation tax will have an impact, however, for smaller companies, with marginal profits, efficient tax planning can help to maintain the small companies rate of corporation tax at 19%. To compensate for this impact, the Chancellor has reinforced the capital allowances regime so that small companies will continue to be able to fully capital expense any investment in respect of I.T, plant and equipment. The Chancellor also announced an increase in the VAT threshold to £90,000; this increase means that fewer businesses will be pulled into mandatory VAT registration.

For employees, the worst-kept secret, as briefed and reported more or less everywhere preceding the Budget, is the further 2p cut in Employees National Insurance, which will be particularly welcome for umbrella employees.  

The Chancellor has also looked to investors and shareholders to bear the additional tax burden who will also feel the impact of the reduction in the annual capital gains tax allowance and dividend allowance. The rather small “ rabbit out of the hat” being the reduction in the higher rate of property capital gain tax from 28% to 24% from 6th April 2024.

Brookson’s view

The measures already announced in the 2023 Autumn Statement will now be felt from 6 April 2024 in that everyone is paying more tax (due to fiscal drag), but this is especially true of contractors and the self-employed. Due to the structure of their businesses, independent contractors working via their own limited company generally won’t benefit from a reduction in Employee’s National Insurance and are hit from 6 April 2024 to a limited extent, by the decrease in the dividend allowance to £500. The increase in corporation tax rates will only affect companies with profits in excess of £50,000 and good company tax planning can help to reduce the effective rate of corporation tax further. It is still worth reiterating that contractors working in their own limited companies (who are outside IR35) continue to enjoy greater tax advantages than those who are permanent employees or who work flexibly via umbrella companies.

It is short-sighted of the Government not to offer more allowances/reliefs to the flexible workforce to support growth, including the infrastructure and energy independence projects that the Chancellor has prioritised. Contractors are available to work as and when their skills are required, and the personal risks associated with this flexibility should be reflected in the tax system.

For umbrella contractors and their supply chains, the Government continues to look to tackle non-compliance in the Umbrella company market and we will keep you informed of developments following recent consultations, we are likely to see an update in April or May. The sooner Government can get the regulations in place the better given the continued promotion of aggressive tax avoidance schemes within the umbrella market.


Key points to consider from 6th April 2024:

  • Further 2p cut in Employee’s National Insurance from 6th April 2024;
  • VAT registration threshold uplifted to £90,000 from 1st April 2024;
  • Tax free dividend allowance reduced to £500 from £1,000; 
  • Annual capital gains allowance reduced to £3,000 from £6,000; 
  • Income tax and National Insurance bands will remain fixed until April 2028;

The key takeaway from the Spring Budget 2024 is the continued requirement for businesses and individuals to contribute to the tax shortfall in equal measure. More than ever, Brookson can assist with ensuring that you maximise income and reliefs to full effect as a result of these budgetary changes.