• Home
  • >
  • Blogs
  • >
  • Tax Changes After Finance (No.2) Act 2024 Passed

Tax Changes After Finance (No.2) Act 2024 Passed

Published by Prerana
Posted Date: May 29, 2024 , Modified Date: May 29, 2024

The Finance (No. 2) Act 2024 has been approved and given Royal Assent. The act was rushed through because the general election is approaching near (scheduled for 4 July), and the Parliament is in its final days.

The Finance Bill has significant amendments that can impact individuals and businesses in the UK. However, most of the tax rates and thresholds for the Tax Year 2024/25 remain unchanged.

What Are the Major Tax Changes?

The bill is set to implement major changes to the National Insurance Contributions (NICs) and Capital Gains Tax (CGT). Here is a breakdown of all the tax changes that will come into effect:

  • National Insurance Contributions (NIC) – The National Insurance has been cut by 2%, which is the second NIC cut this year. The Conservative Party has promised to completely do away with the NIC if the election goes their way.
  • Capital Gains Tax (CGT) – The higher rate of CGT for residential property has been reduced from 28% to 24%. This reduction was effective from 6 April 2024. The lower rate of CGT remains the same at 18%.
  • High Income Child Benefit Charge (HICBC) – The HICBC starting threshold has also increased from Β£50,000 to Β£60,000. The charge will now apply at a rate of 1% of the full child benefit for every Β£200 of adjusted net income between Β£60,000 and Β£80,000. Additionally, the charge for people earning above Β£80,000 will be equal to the full amount of child benefit received. This will ensure a balanced approach to child benefit taxation.
  • Multiple Dwelling Relief (MDR) – The abolition of MDR is no secret now, with the change effective from 1 June 2024. This will affect the investment strategies as the tax advantage of investing in bulk property purchases has been removed.

These major tax changes can affect individuals and businesses in terms of investment and tax payments.

How Will the Amendments Affect Businesses?

There are certain amendments in the Finance (No. 2) Act 2024 that can affect businesses and their investment strategies. Any large business with an annual revenue exceeding Β£1 billion will now face a higher economic crime levy. The economic crime levy has doubled from Β£250,000 to Β£500,000 per year starting from the Tax Year 2024/25.

finance act 2024

Also, according to the Finance Act, people will no longer be able to use companies to transfer assets offshore to avoid UK taxes. This has been done to prevent an attempt to bypass the anti-avoidance legislation of the UK.

Conclusion

The Finance (No. 2) Act 2024 includes several tax changes that will affect individuals and businesses in the UK. The government quickly passed this Act before the general election on 4 July 2024. While many tax rates and thresholds stay the same, there are significant changes to National Insurance Contributions and Capital Gains Tax, as well as other targeted measures to prevent tax avoidance.

Large businesses will need to adjust to the increased economic crime levy and new rules on offshore asset transfers. Taxpayers should stay informed about these changes and adjust their financial planning accordingly.

Prerana
Our Complete Guides
Related Posts

Confused where to start?

Book our Free Discovery Call

Please wait while the page is loading
Current Progress
Current Progress

15 minutes

Choose your preferred date and time

Discuss your business goals, challenges and requirements.

How Our Discovery Call Works

Please wait while the page is loading
Current Progress
Current Progress

Discovery Call

Proposal

Onboarding

Success message!
Warning message!
Error message!