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What you need to know about the Spring Budget 2024

It’s the time of year again when the Chancellor of the Exchequer has unveiled the much-anticipated Spring Budget, outlining the Government’s plans for taxation and spending. Let’s dive into the highlights of the 2024 Budget to help you understand what it means for you.

National Insurance Cuts

One of the headline announcements in this year’s Budget is the reduction in the main rates of National Insurance contributions (NICs) for both employees and the self-employed. Effective from April 2024, the Class 1 employee NICs will see a significant cut from 10% to 8%, while Class 4 employee NICs will drop from 8% to 6%. This move aims to put more money back into the pockets of workers and self-employed individuals.

High-Income Child Benefit Charge (HICBC)

Families across the UK will welcome the changes to the High Income Child Benefit Charge (HICBC). The threshold for HICBC will rise from £50,000 to £60,000 starting in April 2024. Also, the rate at which this charge is applied will be halved, making sure that Child Benefit is not entirely withdrawn until individuals earn £80,000 or more. These changes give families some relief while ensuring that benefits are taken away more fairly.

Taxation of Non-Doms

A big change in the Budget is the end of the tax rules for those not from the UK (‘non-doms’). From April 2025, a new residence-based tax regime will be introduced, making sure that all UK residents pay the same tax on their foreign income and gains after living in the UK for over four years. This move aims to simplify the tax system and promote fairness for everyone living here.

Capital Gains Tax and Stamp Duty Land Tax

Great news for property owners. The Budget is cutting the higher rate of Capital Gains Tax for selling residential properties from 28% to 24% starting in April 2024. And if you’re into buying multiple properties, get ready because Multiple Dwellings Relief in the Stamp Duty Land Tax system is being axed from June 2024. These changes are all about boosting the property market and encouraging people to invest.

Furnished Holiday Lettings

For landlords, changes are on the horizon concerning furnished holiday lettings. From April 2025, the Government will end a tax advantage for landlords who let short-term furnished holiday properties over those who let residential properties to longer-term tenants. This aims to create a level playing field in the rental market.

Fuel Duty and Alcohol Duty

Good news for motorists and drinkers alike – not to be done at the same time, obviously! Fuel duty will remain frozen for another year, extending the temporary 5p cut and making sure that duty rates are not increased with inflation. Similarly, alcohol duty will be frozen from August 2024 until February 2025, providing relief for consumers.

Tobacco and Vaping Duties

In a bid to incentivise healthier choices, a new duty on vaping products will be introduced from October 2026. Tobacco duty will be increased from the same date, maintaining the financial incentive to choose vaping over smoking.

Air Passenger Duty and VAT Threshold

Passengers flying premium economy class, business, and first class, and those travelling by private jet, will see increased rates in Air Passenger Duty from 2025/26 to account for recent high inflation. What’s more, the VAT threshold will be increased from £85,000 to £90,000 in April 2024, providing relief for small businesses.

Energy Profits Levy and Household Support Fund

The Energy Profits Levy, introduced in response to the rise in oil and gas company profits, will be extended to 2028/29. Also, the Household Support Fund, aimed at helping those most in need with rising costs of living, has been extended to September 2024.

Spring Budget 2024: A Diverse Mix of Tax Measures

The Spring Budget 2024 presents a mixed bag of tax measures and announcements aimed at encouraging economic growth, supporting families, and ensuring the tax system is fair for everyone. From cuts in National Insurance contributions to reforms in property taxation and incentives for healthier choices, the Budget sets the stage for a more inclusive and fruitful future. As these changes occur, it’s important to remain up-to-date and adjust to the shifting world of taxes and government spending.

Get Expert Guidance

If you’re eager to optimise your tax strategy, don’t miss out on this chance to make a difference. Reach out to us today for expert advice and support. Whether you prefer a personalised phone call or the convenience of filling out our user-friendly online form, we’re here to help you every step of the way. Call 01603 630882 now to connect with our team or simply complete our online form to kickstart the process. Let’s work together to transform your tax strategy into a powerful catalyst for growth post-budget and beyond. 

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Springing into Energy Savings: A Dive into the Latest Trends

The cost of living crisis has affected most of us, especially when it comes to our energy bills, but as we enter Spring the energy landscape is presenting some unexpectedly warm news for consumers and businesses alike. In our latest blog post, we dive into the latest trends in the energy market brought to you by our trusted partner Indigo Swan, that are shaping a positive outlook for the months ahead. 

Lower Prices on the Horizon

Firstly, something that has everyone talking is that gas and electricity prices are finally taking a little dip. After what feels like ages watching those numbers go only one way (up, of course), we’re seeing a bit of a break. It’s like a little ray of sunshine for both our wallets and our spirits. This shift comes after a bit of a rollercoaster ride, with all those ups and downs driven by world events, and even the weather playing its part. But it looks like the energy market is bouncing back and giving us a bit of relief with lower prices. It’s a breath of fresh air and a nudge in a happier direction for what’s to come in the energy world.

A Well-Stocked Europe

Turning our focus to Europe, you’ll be pleased to hear that their gas storage tanks are looking strong, currently at a solid 79% capacity. That’s a big jump from where they stood in 2022, and they’re even surpassing last year’s levels. With such ample storage capacity, Europe is gearing up for spring with confidence, knowing they have plenty of gas reserves to rely on. 

The Winds of Change and Connectivity

Now, let’s talk about electricity. Gas has been pulling some serious weight, making up a whopping 50% of our generation lately, especially since wind power has been taking a bit of a breather. But hold onto your hats, because things are shifting, due to the Viking Link Interconnector with Denmark being a game-changer. This smart connection has been zipping energy back and forth between nations, and there have even been days when we’ve sent more electricity over to Europe than we’ve received. It just shows how interconnected and resilient our energy setup is.

​​The Global Stage and Its Local Impacts

Taking a look at the big picture, recent tensions in the Middle East, especially the situation in Gaza, could shake things up a bit in the world of gas and oil supplies. But, it’s not all doom and gloom. The steady stream of LNG deliveries and the proactive efforts of different countries to secure shipping routes through the Suez Canal have helped ease some of those worries. This whole situation drives home the point that what’s happening on the global stage can have a direct ripple effect on our local energy markets and what we pay at the pump.

Empowering Customers in Uncertain Times

Given these developments, Indigo Swan recommends that customers, particularly those whose contracts are wrapping up in early 2024, take a moment to reassess their positions. With the current market conditions presenting a positive landscape, now might just be the perfect time to lock in some more preferred energy contracts, making use of those lower wholesale prices. Also, with the switch from the Energy Bill Relief Scheme to the Energy Bills Discount Scheme back in April 2023, there are even more options available for customers to navigate their energy costs with skill, despite the changes in levels of support. It’s all about being savvy and making the most of the opportunities at hand.

The Forecast: Cautious Optimism

As we look to the future, there’s a sense of cautious optimism in the air. With wholesale prices dipping, storage levels sitting comfortably high, and exciting infrastructure projects like the Viking Link in the works, things are looking pretty promising for the energy market. But, and it’s a big but, we can’t ignore the fact that global events have a knack of throwing us curve balls when we least expect it. That’s why it’s important to stay vigilant and take a proactive approach to managing our energy contracts. Being prepared is key to weathering any storm that comes our way.

Your Partner in Navigating Energy Trends

At Norwich Accountancy, we’re more than just number-crunchers; we’re your trusted guides through the maze of energy markets. Our dedication to providing you with top-notch insights and advice never wavers. Whether you’re navigating the ins and outs of the Energy Bills Discount Scheme or plotting your next contract move, we’ve got your back, helping you make smart decisions that move your business forward.

As we keep a close eye on the energy landscape, we urge you to stay engaged, informed, and proactive. The current trends present a golden opportunity for cutting costs and crafting strategic plans. 

If you want to take control of your energy costs and make savvy decisions for your business, get in touch with Indigo Swan. Let’s work together to unlock savings and secure a brighter energy future for your company. 

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Class 2 National Insurance Contributions: What You Need to Know

If you’re self-employed in the UK, you may want to pay Class 2 National Insurance (NI) contributions. You may be wondering why anyone would want to hand over their hard-earned cash if it’s not legally required, but your contributions mean you’re eligible for benefits like State Pension, which we’ll cover in more detail below. 

Who Needs to Pay Class 2 National Insurance?

You’ll need to pay Class 2 NI if your profits from self-employment are above the Lower Profits Limit. For the 2023/24 tax year, the Lower Profits Limit is £12,570. But if your profits are below this amount, for example, you’ve just started out, have returned from maternity leave or perhaps you’ve gone part-time, you don’t need to pay any Class 2 NI contributions.

What Are the Benefits of Paying Class 2 National Insurance?

Whilst Class 2 NI contributions aren’t mandatory, there are lots of good reasons why you should keep them up:

  • The age at which you become eligible for a State Pension depends on what year you were born but as a general rule, it’s currently 66.
  • At some point, you may need and be eligible for benefits, such as unemployment benefits or maternity allowance as long as you’ve been self-employed for 26 weeks in the 66 weeks before your due date.

Paying Voluntary Class 2 National Insurance

Even if your profits are below the Lower Profits Limit, you’re still able to pay voluntary Class 2 NI contributions to make sure that you’re eligible for the State Pension and other benefits should you need them. 

How Much Do You Pay?

Currently, the amount of Class 2 NI you’ll need to pay is fixed at £3.45 per week for the 2023/24 tax year. 

When Do You Pay?

Most self-employed people pay their Class 2 NI contributions through their annual self-assessment tax return.

How to Pay Class 2 National Insurance Contributions

Class 2 NI contributions can be paid online, by phone or by post. To pay online, you’ll need to create an account on the HMRC website. To pay by phone, just call HMRC’s self-assessment helpline. To pay by post, download a payment form from the HMRC website.

More on State Pension

As we mentioned above, one of the biggest benefits of voluntarily keeping your Class 2 NI contributions up to date is being eligible for the State Pension when you reach the right age. 

The State Pension is a government-funded payment to people who have reached retirement age and provides them with an income for the rest of their lives. The amount of State Pension you receive depends on the amount of National Insurance contributions you’ve previously paid. If you don’t have enough ‘qualifying years’, you may not be entitled to the full State Pension when you reach retirement age and will have to fund your living expenses (and the things you like to do) some other way. 

Mortgage matters

Plus, depending on your age, such as if you’re applying when you’re above retirement age, if you don’t have enough of a State Pension then it can affect your ability to get a mortgage. This is because lenders will want to see that you have enough income to meet your mortgage repayments. If your State Pension isn’t enough to cover your monthly payments, you may need another source of income, such as a personal pension or a part-time job.

Lenders will also consider your age when they assess your mortgage application. If you’re coming up to retirement age, they may be more cautious about lending to you and wonder whether you’ll be able to work and earn an income in the future.

Some lenders will ask for confirmation of your Class 2 NI contributions. In these situations, they’ll ask to see your copy of your confirmation and that of HMRC to make sure the details match. If they don’t, it may delay the process.

So, if you’re self-employed, it’s important to understand your Class 2 NI obligations to make sure you’re paying the correct amount and reap the rewards of keeping them up to date when you need them. 

Important point on pensions

If you’ve received any correspondence from HMRC regarding tax amounts stating a figure that’s different to what you’ve been told by your accountant, let them know immediately because it could be linked to the Class 2 State Pension.

We hope this blog has been useful but if you’ve any questions about Class 2 National Insurance, please get in touch.

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VAT Turns 50: Our Review of the Highs and Lows of This Tax in its 50th Year

As the UK’s VAT turns 50, as accountants, we review the highs and lows of this tax in its 50th year.

Value Added Tax (VAT) was introduced in the UK on 1 April 1973 to replace the old purchase tax. It is a consumption tax charged on the sale of goods and services. Over the last half a century, we’ve seen the welcome highs and horrible lows of VAT. So, here are our observations.

VAT highs

You might think that there haven’t been many highs for VAT over the last 50 years but:

  • VAT’s been a very successful tax for the UK government. It’s relatively easy to collect and generates a significant amount of revenue.
  • It’s helped simplify the UK’s tax system. By replacing several other taxes, it’s easier for businesses to calculate and pay their taxes.
  • VAT helped promote cross-border trade. Applying the same tax rate to goods and services sold in different countries makes it easier for businesses to trade internationally.

VAT lows

As you’d expects there is a list of lows when it comes to the impact of VAT, such as:

  • VAT can be a complex tax for businesses to comply with. As we’re sure you already know, there are several different rules and regulations that you need to know about and it can be tricky to keep up with changes to the law.
  • It’s a pain for consumers’ pockets. Added VAT on goods and services makes them more expensive, which means they may be more reluctant to spend.

Looking to the future

As we look to the future, VAT will continue to be an important source of revenue for the UK government. However, it’s also likely that the tax will continue to evolve with changes to VAT rates or new rules and regulations.

The UK may adopt a different approach to VAT in the future, for example, moving to a single rate of VAT or adopting a destination-based taxation system.

Only time will tell what the future holds for VAT. However, one thing is for sure, VAT will continue to be a major factor in the UK tax system for many years to come. As accountants, we closely monitor VAT developments and are here to help you understand, and comply with the latest VAT rules and regulations. Get in touch if you’ve got any VAT-related questions.