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- Introduction
- Personal Income Tax
- Employees
- National Insurance Contributions
- Savings and Pensions
- Capital Gains Tax
- Inheritance Tax
- Trusts & Estates
- Business Tax
- Corporation Tax
- Value Added Tax
- Other measures
- Income Tax Rates & Allowances
- National Insurance Contributions (Table D)
Budget sections
Business Tax
Furnished holiday lettings (FHL)
For many years, income from FHL has been treated as a trade for income tax purposes, enjoying a number of advantages over general property rental. A FHL has to satisfy a number of conditions about availability for letting, actual periods let during the year and length of stays; if it qualifies, the advantages include unlimited relief for finance costs, capital allowances, and CGT business reliefs on disposals.
As widely predicted before the Budget, the Chancellor has decided to abolish the favoured treatment of FHL. He said this was to eliminate the advantage of short-term letting over longer-term letting to residential tenants, with the intention of making more property available for residents rather than visitors.
FHL treatment will be abolished from 6 April 2025. Details of the rules are not yet available, but it is likely that there will be tax charges arising on the transfer of properties from the FHL regime to the normal rental regime (such as balancing charges on assets on which capital allowances were claimed). Where money has been borrowed to finance the purchase of FHL property, the restrictions on interest relief for general residential rental income will apply in 2025/26.
Anti-forestalling rules will apply from 6 March 2024 to prevent taxpayers attempting to preserve the effect of the FHL rules on future capital gains by entering into unconditional sale contracts in advance.
Recovery Loan Scheme
The Recovery Loan Scheme has been renamed as the Growth Guarantee Scheme and extended until the end of March 2026. The scheme offers a 70% government guarantee on loans to SMEs of up to £2 million in Great Britain, and £1 million in Northern Ireland.
Business rates
The March 2021 Budget extended the period for which companies and unincorporated businesses can ‘carry back’ losses to offset against taxable profits of earlier years and claim a refund of tax paid on those profits. Losses of 2020/21 and 2021/22 (for companies, accounting periods that end between 1 April 2020 and 31 March 2022) can be carried back three years (subject to monetary limits). This rule has not been extended, so losses of 2022/23 will revert to the normal carry back period of one year.
Construction Industry Scheme (CIS)
The CIS requires many businesses carrying out construction work to deduct tax (at either 20% or 30%) before paying subcontractors unless the supplier has gross payment status (GPS), which HMRC will grant to subcontractors who show a good record of tax compliance.
From 6 April 2024, VAT obligations are added to the statutory compliance test for being granted (and for keeping) GPS.
The measure also extends one of the grounds for immediate cancellation of GPS. HMRC is able to withdraw GPS if they have reasonable grounds to suspect that the GPS holder has fraudulently provided an incorrect return or incorrect information in relation to a list of taxes. This has been extended to include VAT, Corporation Tax Self- Assessment (CTSA), Income Tax Self-Assessment (ITSA) and PAYE.
Other reforms, also to come in from 6 April 2024, are:
- Digitalising applications for CIS registration.
- Bringing forward the first review of a GPS holder’s compliance history from
- 12 months after application to 6 months, reverting to 12 months thereafter.l Removal of the majority of landlord to tenant payments from the scope of the CIS.
Changes of basis
Although there were no new announcements in this Budget, two important changes are coming in on 6 April 2024. After a transitional year in 2023/24, self-employed trading profits will be assessed on a fiscal year basis in 2024/25, regardless of the accounting date chosen by the business. Anyone who has an accounting date other than 31 March or 5 April should have been preparing for this change.
Secondly, the cash basis of accounting becomes the default for calculating trading profits for unincorporated businesses of any size for 2024/25. It will still be possible to choose to calculate profits using accruals accounting. All self-employed traders should consider the impact of the change and decide what is best for them.