07 March 2024 
Julia Ascott, Employment Taxes Specialist
In a general election geared Spring Budget, there weren’t as many tax changes as there could have been. We watched the speech, then read the documents to outline the announcements for you:
If you want details of all the tax measures read through HMRC’s OOTLAR (Overview of tax legislation and rates). You can find a summary all tax/levy rates in this Annex.
If you just want the highlights and how it may affect your institution, our budget special below is for you.
NIC reductions
Another reduction in Class 1 employee (not employer) NIC from 10% to 8% from 6 April 2024 – giving payroll providers plenty of time to update their system, hopefully they learnt valuable lessens from the change in January. Ensure you are speaking with your payroll and/or payroll system providers to manage the changes needed. If you do not work within payroll, be aware that this change may require more resource from your payroll team in a short time-frame. Maybe bake them a cake to show how much you appreciate being paid!
This will provide taxpayers with an average saving of around £450 per year. However, the tax thresholds remain frozen (aka the fiscal drag, aka stealth taxes), which in real terms mean that, after tax, you still aren’t taking home as much as you would have done in 2021 when the ‘freeze’ was announced. In fact, in March 2023 the OBR calculated that the freeze to the personal allowance threshold takes its “real value in 2027-28 back to its 2013-14 level.”
High Income Child Benefit
High Income Child Benefit Charge threshold uplifted from £50k to £60k from 24/25 tax year – with plans to consult on more dramatic changes to the way the charge is calculated in the future to make it fairer. It is likely that the charge will be based on a household income rather than individual basis by April 2026.
Abolish Class 2 NIC?
There will be a consultation later this year to consider abolishing Class 2 NIC completely. The 2023 Autumn Statement removed the requirement to pay Class 2 NIC for self-employed workers. However, the NIC rate is used on a voluntary basis for individuals who perhaps don’t earn above the benefits threshold for Class 1 NIC or are overseas and want to continue accessing the social security benefits it allows in the UK (e.g. NHS services). An alternative will need to be available.
UK Non-Dom rules replaced
The Non-UK Domiciled remittance basis taxation rules will be abolished from 6 April 2025, to be replaced by a ‘simpler’ residence based system, with a four year tax break on foreign income and gains (for those who opt in). Overseas Workday Relief for the first 3 years of UK residence will also be simplified, aligned with the individual’s residence and whether they opt in to the new rules. Deloitte have summarised the key changes here.
Clarity on tax deductibility of training costs
Although not directly related to the sector, the announcement that HMRC will issue guidance for sole traders and the self-employed to provide greater clarity on the tax deductibility of training costs is welcome.
There were very few announcements on VAT in the Spring Budget and even less that are relevant to the H E sector.
The main one is that from 1 April 2024 the VAT registration threshold increases from £85k to £90k and deregistration threshold from £83k to £88k. If you have a separately VAT registered subsidiary with low income that would benefit from deregistering from VAT, this might be of interest.
There are also some technical amendments to give HMRC the power to automatically collect overpaid VAT repayment interest.
Gift Aid
Protection will be brought in for charities to protect against the unintended impact of The Digital Markets, Competition, and Consumers Bill, which will introduce new protections for consumers who take out subscription contracts.
The government will amend existing Gift Aid legislation by Statutory Instrument to ensure that eligible charities which operate subscription models can continue to claim Gift Aid while complying with these new protections.
Theatre Tax Relief, Orchestra Tax Relief, and Museums and Galleries Tax Relief
The higher rates of 40%/45% will take effect from 1 April 2025. These will be permanent.
More information can be found in Corporation Tax: extension to the temporary rates of relief for theatre, orchestra, museum and galleries exhibition tax relief.
Audio-Visual Expenditure Credit
Additional support for independent films industry will be provided via a credit rate of 53% on qualifying expenditure. See Corporation Tax: tax relief for independent film productions for more details.
This might be of interest to your film schools and/or if you have subsidiaries involved in making independent films.
The window to claim tax reliefs in Freeport special tax sites will be extended from 5 to 10 years, so the “sunset” dates will be:
The ECL has not reached it revenue target of £100 million per annum.
So, the government will increase the charge paid by businesses with UK revenue greater than £1 billion, and which are regulated for anti-money laundering purposes, from £250,000 to £500,000 per annum, from tax year 2024 to 2025 onwards.
Where our members are registered with the FCA, this increase will apply to them.
(We are continuing to work on a project regarding the ECL and how/when it impacts on the H E sector.)
Confirmation that universities need to report on their spin-out policies by the end of May 2024 to “boost commercialisation across the UK’s university sector”. This follows the issue of Government Response: Independent Review of University Spin-outs (November 2023). The government will also consult on the design of the new £20 million proof-of-concept fund and the pilot approach to supporting the establishment by universities of shared Technology Transfer Offices (who manage Intellectual Property and assets).
HMRC are consulting on the tax advice market and are going to provide a further update on the progress of tackling non-compliance in the umbrella company market.
An Open consultation, Raising standards in the tax advice market: strengthening the regulatory framework and improving registration has been issued with a response date of 29 May 2024.
Taking a step back from Tax, confirmation that universities need to report on their spin-out policies by the end of May 2024 to “boost commercialisation across the UK’s university sector”. This follows the issue of Government Response: Independent Review of University Spin-outs (November 2023). The government will also consult on the design of the new £20 million proof-of-concept fund and the pilot approach to supporting the establishment by universities of shared Technology Transfer Offices (who manage Intellectual Property and assets).
Spring Budget puts UK on fast-track to becoming science and technology superpower sets out various funding initiatives across a variety of areas from training doctors to AI.
The Case for Cambridge sets out plans to “harness future economic growth to pay for the new infrastructure needed to grow the city and increase the quality of life for residents”. The academic history of the city and plans for future research opportunities feature heavily in the document.
Devolution announcements impact on the North East, Buckinghamshire Council, Surrey County Council, and Warwickshire County Council, West Yorkshire, Liverpool City Region, and South Yorkshire Combined Authorities, Greater Manchester and West Midlands.
Further information can be found on the Department for Levelling Up, Housing and Communities website and these documents have been issued in the last few days:
