Below, we have prepared a snapshot of the changes and how they could possibly affect you:
Key Measures and Their Impacts
Income Tax Changes:
The income tax rates for the tax year 2024-25 remain unchanged: 20% (basic), 40% (higher), and 45% (additional). These stable rates ensure a predictable tax environment for taxpayers.
Capital Gains Tax:
Effective from 6 April 2024, the higher rate of capital gains tax on residential property gains will reduce from 28% to 24%. This adjustment aims to stimulate the property market, making it more favourable for sellers.
High Income Child Benefit Charge:
The threshold for the High Income Child Benefit Charge will increase from £50,000 to £60,000, with a new upper limit at £80,000. The clawback will start at 1% for every £200 above £60,000. This revision provides relief to middle-income families, reducing the financial burden and making it more attractive for households to claim child benefit.
Support for Creative Industries:
The Bill introduces enhanced tax credits for creative sectors, with tax credits increasing to 45% for touring theatre productions and 40% for non-touring productions. This initiative is designed to boost the cultural economy, encouraging more creative projects and performances.
Stamp Duty Land Tax (SDLT):
From 1 June 2024, the Multiple Dwellings Relief (MDR) will be abolished. Multiple Dwellings Relief allowed purchasers of multiple properties in a single transaction to calculate the SDLT based on the average price of each property, rather than the total price. Abolishing MDR simplifies the SDLT system, reducing administrative complexity and potential abuses where buyers might have structured transactions to minimize tax liabilities unfairly. This change promotes a fairer tax structure and ensures that SDLT is applied more consistently across property transactions.
Energy Security Investment Mechanism (ESIM):
The ESIM disapplies the Energy Profits Levy (EPL) when oil and gas prices fall below specified thresholds, adjusted annually by the Consumer Price Index. This mechanism provides stability to the energy sector, encouraging sustained investment despite fluctuations in market prices.
Agricultural Property Relief and Woodlands Relief:
Starting 6 April 2024, these reliefs will be restricted to UK properties only, excluding properties in the Channel Islands, Isle of Man, and the EEA. This alignment with post-Brexit regulations ensures fairness and consistency in the tax system.
Transfer of Assets Abroad:
This clause introduces a provision to ensure that UK tax cannot be avoided where a UK resident close company, or a non-resident company that would be close if it were UK resident (“a closely-held company”), is used to avoid the transfer of assets abroad (ToAA) provisions. The provision will apply to income arising on or after 6 April 2024.
The ToAA legislation is a wide-ranging anti-avoidance provision designed to prevent individuals from transferring ownership of income-generating assets to an overseas individual or entity while still being capable of benefitting from the income they generate. The legislation prevents individuals from using closely-held companies to move assets into offshore structures in a way that would remain outside the scope of the ToAA provisions.
Conclusion
The Finance (No. 2) Bill 2024 introduces critical changes that will impact estate planning and tax compliance. At Belluzzo International Partners, we are dedicated to guiding you through these updates, ensuring you remain compliant while optimising your financial strategies.
For personalised advice or more information on how these changes may affect you, please contact our expert team. We are here to assist you with all aspects of your legal and tax compliance needs, providing tailored solutions to meet your specific requirements.
